Bunk stores has requested a quote for a special order of bubbs. this order would not be subject to any corporate allocation (and
1 answer:
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Answer:
option (D) $52.96
Explanation:
Data provided in the question:
Number of stock outstanding = 120,000 shares
Growth rate, g = 3.8% = 0.038
Free cash flow in the next year = $648,200
Required rate of return, r = 14% = 0.14
Now,
Stock price is calculated as:
Stock price =
on substituting the respective values, we get
Stock price =
or
Stock price = 52.957 ≈ $52.96
Hence,
the correct answer is option (D) $52.96