Use the Table for the Question(s)below

question 29

Multiple Choice

Use the table for the question(s) below.
-Banco Industries expect sales to grow at a rapid rate over the next 3 years,but settle to an industry growth rate of 5% in year 4.The spreadsheet above shows a simplified pro forma for Banco Industries.Banco industries has a weighted average cost of capital of 12%,$50 million in cash,$60 million in debt,and 18 million shares outstanding.If Banco Industries can reduce their operating expenses so that EBIT becomes 12% of sales,by how much will their stock price increase?

• A)$2.81
• B)$3.36
• C)$4.98
• D)$8.89

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Definitions:

Pancreas

A glandular organ in the digestive system and endocrine system of vertebrates, producing digestive enzymes and hormones such as insulin.

Digestive System

A group of organs responsible for the breakdown of food, absorption of nutrients, and elimination of waste in organisms.

Gastric Glands

Glands located in the lining of the stomach that secrete acid and enzymes, crucial for the digestion process.

Stomach

A muscular hollow organ in the gastrointestinal tract of animals for digesting food chemically and mechanically.