Business, 10.08.2021 17:40 zhellyyyyy

J. Clark Inc. (JCI), a manufacturer and distributer of sports equipment, has grown until it has become a stable, mature company. Now JCI is planning its first distribution to shareholders. Shown below are the most recent year's financial statements and projections for the next year, 2011 (JCI has a fiscal year ending on June 30). JCI plans to liquidate $500 million of its short-term securities and distribute them on July 1, 2011, the first day of the next fiscal year, but has not yet decided whether to distribute with dividends or with stock repurchases. Inputs Amount of distribution $500
Tax rate 40%
WACC 11.0%
Number of shares 1,000
FCF constant growth rate 6.0%

Actual Projected Income Statement (Millions of Dollars)

6/30/2010 6/30/2011
Net Sales $20,000.00 $21,200.00
Costs (except depreciation) $16,000.00 $16,960.00
Depreciation $1,300.00 $1,378.00
Earning before int. & tax $2,700.00 $2,862.00
Interest expense $150.00 $152.82
Earnings before taxes $2,550.00 $2,709.18
Taxes $1,020.00 $1,083.67
Net income $1,530.00 $1,625.51

Required:
What is JCI's current intrinsic stock price (the price on 6/30/2010)? What is the projected intrinsic stock price for 6/30/2011?

Answers: 3

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J. Clark Inc. (JCI), a manufacturer and distributer of sports equipment, has grown until it has beco...

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