Use the table for the question(s)below.
-Banco Industries expects sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco Industries has a weighted average cost of capital of 12%, $50 million in cash, $60 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's share price at the start of year 1?
A)$20.11
B)$11.12
C)$12.03
D)$6.03

Question

Use the table for the question(s)below. 
-Banco Industries expects sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco Industries has a weighted average cost of capital of 12%, $50 million in cash, $60 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's share price at the start of year 1?
A)$20.11 
B)$11.12 
C)$12.03 
D)$6.03

Quizplus · Accepted Answer

The Answer is C

Use the Table for the Question(s)below