Question: Summary Income Statement in $ Sales 5,000,000 EBIT 1,000,000 Int. Expense 40,000 EBT 960,000 Net Income 624,000 Other Financial Information in $ Market Value of

Summary Income Statement in $

Sales 5,000,000

EBIT 1,000,000

Int. Expense 40,000

EBT 960,000

Net Income 624,000

Other Financial Information in $

Market Value of LT Debt 500,000

Market Value of Equity 4,500,000

Avg. P/E 12x

Growth rate “g” = 0.04

13.Calculate required rate of return “r”

14.Calculate intrinsic value. [Assume or substitute Net Income for Cash Flow].

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