Problem
Calculate the per share value of ABC firm using the following information: - Year 0 sales per share 75$ - Sales grow at a rate of 10% annually for 3 years and 5% annually thereafter. - Net profit margin is 15% of sales for ever - Net investment in fixed capital (net of depreciation) is 40% of the sales increase - Annual increase in WC is 30% of the sales increase - Debt financing is 60% of the net investments in capital equipment and working capital - ABC beta is 1.5, risk free rate of return is 8%, equity premium is 5% 3.