FIN 571 Week 5 Connect Problems FOR MORE CLASSES VISIT www . fin571tutor . com
You manufacture hunting pack systems in China for 80 dollars each , including shipping . The manufacturing costs only include variable costs . Variable costs are not calculated as a percentage of sales in this case . Sales are a function of the number of packs sold and the price per pack . Likewise , variable costs are a function of the number of packs sold and the cost to produce each pack . You sell these packs to retailers for 200 dollars each . In the current year you will sell 100,000 packs . Your fixed costs including such items as insurance , marketing , travel , shows , office supplies , warehouse rentals etc . totals 5 million dollars this year and are not part of the 80 dollars per pack manufacturing cost . The federal income tax rate for your company is 40 percent . Your company is publicly traded on the NASDAQ with 1,000,000 shares outstanding . Please create a current income statement using the same format as found in the lecture . ( 5 points ) Please calculate earnings per share . ( 2 points ) Please calculate the price / earnings multiple assuming that the current stock price is 10 dollars per share . ( 2 points ) Create a two-year forecast of the income statement from the information provided in problem number one . Please create three columns of data : current year , year 2 , and year 3 . Assume that sales increase ten percent per year for year ' s two and three . Please show the earnings per share for each of the three years . ( 10 points )
3 . Please estimate the stock price for year ' s two and three , assuming that the current PE multiple remains constant for each of the two forecasted years . ( 6 points ).
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FIN 571 Week 5 Connect Problems FOR MORE CLASSES VISIT www . fin571tutor . com