Business, 22.02.2021 19:40 aahneise02

Rite Bite Enterprises sells toothpicks. Gross revenues last year were $8.0 million, and total costs were $3.9 million. Rite Bite has 1.2 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 4 percent per year. Rite Bite pays no income taxes. All earnings are paid out as dividends. (Do not round intermediate calculations and round your answers to 2 decimal places. (e. g., 32.16)) a. If the appropriate discount rate is 14 percent and all cash flows are received at yearâ€™s end, what is the price per share of Rite Bite stock? $35.53
b. Rite Bite has decided to produce toothbrushes. The project requires an immediate outlay of $17.5 million. In one year, another outlay of $6.5 million will be needed. The year after that, earnings will increase by $4.7 million. That profit level will be maintained in perpetuity. What will the new stock price be if the project is undertaken?

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Rite Bite Enterprises sells toothpicks. Gross revenues last year were $8.0 million, and total costs...

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