The following are actual financial statements for George, Inc. for the year endi

Question

The following are actual financial statements for George, Inc. for the year ending December 31, 2009 and George's 2010 proforma statements (in millions):

12/31/09 12/31/10 Proforma
Revenue $500.0 $530.0
Expenses 360.0 381.6
Depreciation 37.5 39.8
Interest 13.9 16.0
EBT 88.6 92.6
Taxes (40%) 35.4 37.0
NI 53.2 55.6
Dividends 46.8 37.1
Add. To RE 6.4 18.5
Shares Outstanding 10.0 10.0

Bal. Sheet
Assets
Cash 5.3 5.6
Marketable Securities 49.9 51.9
A/R 53.0 56.2
Inv. 106.0 112.4
Total Current Assets 214.2 226.1
Net F/A 375.0 397.5
Total Assets 589.2 623.6

L & Sh. Eq.
A/P 9.6 11.2
Notes Payable 69.9 74.1
Accruals 27.5 28.1
L-T Bonds 140.8 148.2
Pref. Stock 35.0 37.1
Common Stock 160.0 160.0
RE 146.4 164.9
Total L & Sh. Eq. 589.2 623.6

George Inc. is expected to grow at a constant 6% rate after 2010. George’s WACC is 11% and its total operating capital as of December 31, 2009 is $502.2 million. What is BAGS price per share for the end of 2009?

Explanation / Answer

BAGS Price per share for the end of 2009

= [Total Common Stockholder’s Equity / Number of shares Outstanding]

Common Stockholder’s Equity for the end of 2009 = $160.0

Number of shares outstanding = 10.0

BAGS Price per share for the end of 2009 = [$160.0 / $10.0]

BAGS Price per share for the end of 2009 = $16 per share

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