6) The Lauren Kilt Company has been experiencing a growth rate of almost 14% a year in its free cash flow to equity (FCFE), which as of the end of 2006 is $150 million. The management projects (and you agree) that the firm should experience the following annual growth rates going forward: 2007-2010 2011-2012 2013-2014 2015 forward 12 percent 10 percent 8 percent 6 percent The Lauren Kilt Company has 50 million shares outstanding and its stock has a Beta of 0.80. The current 10-year Treasury Note has a yield of 5.00 percent, and the consensus is that is that the equity risk premium (ERP) for the market is 4 percent. Using a multi-stage cash flow valuation model, determine the intrinsic value of Lauren's stock and compare its value to the current per share market price of $25.00. Would you buy the stock?

6) The Lauren Kilt Company has been experiencing a growth rate of almost 14% a year in its free cash flow to equity (FCFE), which as of the end of 2006 is $150 million. The management projects (and you agree) that the firm should experience the following annual growth rates going forward: The Lauren Kilt Company has 50 million shares outstanding and its stock has a Beta of 0.80 . The current 10-year Treasury Note has a yield of 5.00 percent, and the consensus is that is that the equity risk premium (ERP) for the market is 4 percent. Using a multi-stage cash flow valuation model, determine the intrinsic value of Lauren's stock and compare its value to the current per share market price of $25.00. Would you buy the stock