Estimate the stock price for yearrsquos two and three

Assignment Help Finance Basics
Reference no: EM13395391

You manufacture hunting pack systems in China for 80 dollars each, including shipping. The manufacturing costs only include variable costs. Variable costs are not calculated as a percentage of sales in this case. Sales are a function of the number of packs sold and the price per pack. Likewise, variable costs are a function of the number of packs sold and the cost to produce each pack. You sell these packs to retailers for 200 dollars each. In the current year you will sell 100,000 packs. Your fixed costs including such items as insurance, marketing, travel, shows, office supplies, warehouse rentals etc. totals 5 million dollars this year and are not part of the 80 dollars per pack manufacturing cost. The federal income tax rate for your company is 40 percent.

Your company is publicly traded on the NASDAQ with 1,000,000 shares outstanding.

a. Please create a current income statement using the same format as found in the lecture.
b. Please calculate earnings per share.
c. Please calculate the price/earnings multiple assuming that the current stock price is 10 dollars per share.

2. Create a two-year forecast of the income statement from the information provided in problem number one. Please create three columns of data: current year, year 2, and year 3. Assume that sales increase ten percent per year for year’s two and three. Please show the earnings per share for each of the three years.

3. Please estimate the stock price for year’s two and three, assuming that the current PE multiple remains constant for each of the two forecasted years.

Reference no: EM13395391

Questions Cloud

Davis industries must choose between a gas powered and a : davis industries must choose between a gas powered and a electric powered forklift truck for moving materials in its
Mike and carl want to start the business of providing : mike and carl want to start a business of providing courier services. the have the following options available
Select a home country other than the us and choose an : select a home country other than the u.s. and choose an organization for which one of your team members works. if you
Your report must flow from beginning to end 1 how did the : write an 800-1000 word summarydescription of the book. includeemphasize the following ideas where appropriate. devote
Estimate the stock price for yearrsquos two and three : you manufacture hunting pack systems in china for 80 dollars each including shipping. the manufacturing costs only
What was the dollar price of the bond what is the bonds : suppose that the financial management corporations 1000 par-value bond had a 5.700 coupon matured on may 15 2017 had a
New-project analysis you obtain been asked by the chair of : new-project analysis you obtain been asked by the chair of your company to evaluate the proposed acquirement of a new
A baby is born with a hole between the right and left : 1. a baby is born with a hole between the right and left atrium. thinking of the anatomy of the heart what symptoms
In which of the following plans would we most likely find : 1.nbspnbsp a key ingredient of the marketing management process is insightful marketing strategies and plans that can

Reviews

Write a Review

Finance Basics Questions & Answers

  Finance-interest and retirement

How much can you spend for each year after you retire? Your first withdrawal will be made at the end of your first retirement year.

  Determine the year 1 cash flow

As a member of UA company's financial staff, you must estimate the Year one cash flow for a proposed project with the following information.

  Determine the amount of average inventory

McKinnley Company is constructing a plan to finance its asset base. The firm has $5,000,000 in current assets, of which 20 percent are permanent, and $12,000,000 in fixed assets.

  The current value of a popular stock index

1- Suppose the current value of a popular stock index is 653.50 and the dividend yield on the index is 2.8%. Also, the yield curve is flat at a continuously compounded rate of 5.5%.

  An investment strategy

What would your recommendations be to your clients? Please make sure to discuss how you would convince the young adult to invest.

  Evaluate a company''s average tax rate

To evaluate a company's average tax rate an analyst would - Typical U.S. GAAP disclosures for deferred income taxes include all of the except

  Calculate terminal or horizon value of operations

Sony Company has never paid a dividend. The free cash flow is projected to be $40,000 & $50,000 for the next two years, & after 2nd year it is expected to grow at a constant rate of 6%.

  What is the sensitivity of ocf to changes in quantity sold

Dr. Neil deGrasse Tyson has recommended to the Hayden Planetarium that they sell stuffed animals, such as Disney's loveable Pluto character, to help fund their research efforts on finding planetoids in our outer solar system.

  Rebecca wants to buy a new saddle for her horse the one she

1.dave borrowed 950 for one year and paid 52.50 in interest. the bank charged him a 4.50 service charge. what is the

  Disclosure requirements under the truth-in-lending act

Explain the disclosure requirements under the Truth-In-Lending Act. In your discussion, include several examples of disclosures that are required for a fixed-rate mortgage note, as well as an adjustable-rate mortgage note.

  Calculate total of consolidated revenues

Jarel purchased 80% of the outstanding voting stock of Suarez for $260,000. Of this payment, $20,000 was allocated to equipment that had been undervalued on Suarez's books by $25,000.

  What is their cost of retained earnings

A firm's new bonds will have a 13% current yield. The current price of common shares is $40.00; the most recent dividend (D0) was $2.00. The firm's tax rate is 35%. The firm is expected to grow at 9% for the foreseeable future. What is their cost ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd