Valuation of the brand name. Ross Laboratories sells various formulations of infant baby food around the world under the brand name Similac. In a recent year, worldwide sales less operating expenses were $\$ 600$ million. Ross Laboratories employed $\$ 500$ million of physical capital to produce and sell this food. Estimate the value of the Similac brand assuming the following:

a. Ross Laboratories charges 10 percent, before taxes, for physical capital, pays income taxes at the rate of 40 percent of pretax income, and uses a price/earnings ratio (capitalization factor) of 17 .

b. Ross Laboratories charges 20 percent, before taxes, for physical capital, pays income taxes at the rate of 40 percent of pretax income, and uses a price/earnings ratio (capitalization factor) of 8 .