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4) You have been asked to value Revox Inc., a cement company. The company reported $ 5 million in after-tax operating income on revenues of

4) You have been asked to value Revox Inc., a cement company. The company
reported $ 5 million in after-tax operating income on revenues of $ 100 million in
the most recent year. It expects revenues to grow 20% next year as the economy
comes out of the recession and the after-tax operating margin to improve to 10%.
The firm expects capital expenditures of $ 10 million and depreciation of $ 4
million next year; there are no working capital requirements. After next year, the
expected growth in operating income is 4% forever and the firm expects to
maintain a return on invested capital of 12% in perpetuity. If the cost of capital is
10%, estimate the value of Revox Inc. today. (3 points)

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