#2

of 8 times operating income? you are as 2 Genoa Pasta manufactures Italian food products and currently earns $80 million in carnings before interest and taxes. You expect the firm's earnings to grow 20 percent a year for the next six years and 5% thereafter. The firm's current after rax return on capital is 28%, but you expect it to be halved after the sixth year. the terminal value for the firm. (The tax rate for the firm is 40%.) Calore Ine manufacturer il the cost of capital for the firm is expected to be 10% in perpetuity, estimate