This problem has been solved!

Do you need an answer to a question different from the above? Ask your question!

# At the end of 2021, ABC company had total sales $22 million. They had 1.3 million shares outstanding. We expect sales growth to be 6% per year for the next 3 years. After that we expect sales growth to

**Transcribed Image Text:**

## At the end of 2021, ABC company had total sales $22 million. They had 1.3 million shares outstanding. We expect sales growth to be 6% per year for the next 3 years. After that we expect sales growth to be 3% into perpetuity. The company's profit margin is 15% and the company has a return on equity of 25%. The cost of equity is 12%. Forecast: 1) Sales per Share 2) Profit (earnings per share) 3) Free cash flow to equity (per share) for the next 3 years, along with a terminal value beyond the three years. 4) Determine the intrinsic value of the stock. 5) How much of the intrinsic value comes from our estimate of future growth (PVGO)?

- Expert Answer

## Sales per Share Sales per Share Total Sales Number of Shares Outstanding Sales per Share 22000000 13 View the full answer

**Related Book For**

## Fundamentals Of Corporate Finance

ISBN: 9780135811603

5th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

Post a Question and Get Help

Cannot find your solution?

Post a FREE question now and get an answer within minutes*.

*Average response time.

### Related Video

The Dupont analysis is an expanded return on equity formula, calculated by multiplying the net profit margin by the asset turnover by the equity multiplier. The DuPont analysis is also known as the DuPont identity or DuPont model.This Video will guide on how to calculate return on Equity and estimate profitability of shareholders using DuPont Analysis.