2. Assume that Galaxy will grow at a 7.25 percent per year for the next 3 years and at 3.95 percent per year afterward. Their WACC is 7.92 percent. Using their book value of debt as a proxy for their market value of debt, what is the estimated value of Galaxy's equity? Galaxy United, Inc. 2012 Income Statement Net sales Less: Cost of goods sold Less: Depreciation Earnings before interest and taxes Less: Interest paid Taxable income Less: Taxes Net income $627,800 521,400 11.200 95,200 10.100 $85,100 28,900 $56.200 Galaxy United, Inc. 2011 and 2012 Balance Sheets 2011 2012 2012 2011 $17.000 S16,500 S128,600 Cashi S134,700 Accounts payable Long-term debt 147.500 135,500 Accounts rec. 56,700 54.100 125.000 Common stock 140,000 Inventory 186,700 189.400 Sub-total $259,900 120,700 S260,500 131,800 Retained earnings Net fixed assets 261,300 282.100 Total $521.800 $542.000 Total S521,800 S542.000 *The par value of the common stock is $1 per share