Answer based on the following information: Summary Income Statement in $ Sales5,000,000 EBIT1,000,000 Int. Expense40,000 EBT960,000 Net
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Question:
Answer based on the following information:
Summary Income Statement in $
Sales5,000,000
EBIT1,000,000
Int. Expense40,000
EBT960,000
Net Income624,000
Other Financial Information in $
Market Value of LT Debt500,000
Market Value of Equity4,500,000
Avg. P/E12x
Growth rate "g" = 0.04
a) Calculate required rate of return "r"
b) Calculate intrinsic value.[Assume or substitute Net Income for Cash Flow
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