Estimate of the current stock price

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Ernie Manufacturing has projected sales of $220 million next year. Costs are expected to be $120 million and net investment is expected to be $55 million. Each of these values is expected to grow at 14 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 6 percent where it will remain. There are 5.5 million shares of stock outstanding. Investors require a return of 13 percent and the corporate tax rate is 40 percent. What is your estimate of the current stock price?

Reference no: EM131190157

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