Item Line 1 Line 2 Line 3 Line 4 Line 5

Sales in Units 1,000,000 3,000,000 5,000,000 4,000,000 7,000,000

Selling Price Per unit 3 4 2.5 5 7
Variable Cost Per unit 1 2 1.2 2 3
Total Fixed Cost 6,250,000
No. Of Shares 1,000,000
Risk Free Rate 10%
Co. Beta 1.4267
Market Required Rate 25%

GW is consisting of 60% Equity & 40% Debt

while
the Total invested Capital is worth for $ 100
Million, The interest rate of
long-term debt is 10% while tax rate 40%.
The company decided this year
to pay out 40% of it annul earning to their
stock holders.

1 Total sales revenues for whole company 96,500,000

Total Cost: Variable +Fixed (COGS)
2 48,250,000
3 Find net income after interest and Tax (NI)
EBIT 48,250,000
Interest 4,000,000
EBT 44,250,000
Taxes 17,700,000.0
Net income 26,550,000.0

4 Dividend for the Current Year ( D0 )

EPS 26.55
D0 (Payout 40 % ) 10.62

5 Equity 100,000,000
ROE 27%

6 RRR
RRR=RFR+(RM-RFR)*Beta 31.40%

7 Fair Value P0

g 16%
D1 12.3192

79.63026405

Decision will be to buy more shares as there

is a room for price increase until reaches the
8 fair vales