FOR QUESTIONS 59-78: HERE ARE THE ASSUMPTIONS AND RELEVANT DATA. PLEASE PAY CARE

Question

FOR QUESTIONS 59-78: HERE ARE THE ASSUMPTIONS AND RELEVANT DATA. PLEASE PAY CAREFUL ATTENTION TO THEM; ONE MISSED ASSUMPTION MAY AFFECT MANY ANSWERS: >YEAR 1: . SALES REVENUE: $10,000,000 . COST OF GOODS SOLD: $5,000,000 IMPORTANT: COSTOF GOODS SOLD STAYS CONSTANT FOR YEARS 1 2, AND3 . CORE OPERATING EXPENSES: $3.3 MILLION IMPORTANT: DO NOTINCLUDE THE FOLLOWING EXPENSES IN THE OPERATING EXPENSES. BUL INSTEAD. INIUDE THE FQLLOWINGTHREEEXPEN?ES AFTER CM-CULATING OPERATING INCOME . DEPRECIATION: THE BASE IS $3,000,000, DEPRECIATION IS OVER 5 YEARS AND IS TAKEN ON A STRAIGHT LINE BASIS; . INTEREST EXPENSE: $250,000; . TAX EXPENSE: $250,000 IMPORTANT: DEPRECIATION, INTEREST AND TAX EXPENSE REMAIN UNCHANGED FROM YEAR 1 FOR YEARS 2 & 3: . SALES REVENUE: USING YEAR 1 AS THE BASE YEAR, APPLY A COMPOUNDED ANNUAL GROWTH RATE OF 4.5% . COST OF GOODS SOLD: SEE NOTE: THIS REMAINS $5 MILLION FOR YEARS 2 AND 3 . CORE OPERATING EXPENSES: USING YEAR 1 AS THE BASE YEAR, APPLY A COMPOUNDED ANNUAL GROWTH RATE OF 3%. . AGAIN DEPRECIATION, INTEREST, AND TAXES REMAIN UNCHANGED FROM YEAR I >FOR ALL YEARS: ASSUME 10 MILLION SHARES OF COMMON STOCK OUTSTANDING BUTASSUME THE FOLLOWING STOCK PRICE PER SHARE: YEAR 1: $6 YEAR 2: $7 YEAR 3: $10

Explanation / Answer

FOR QUESTIONS 59-78: HERE ARE THE ASSUMPTIONS AND RELEVANT DATA. PLEASE PAY CARE

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