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6 ) will upvote if answer is right, no chagpt please You have been asked to review the valuation of a privately - owned family

6) will upvote if answer is right, no chagpt please
You have been asked to review the valuation of a privately-owned family business for an all-equity funded transaction. The analyst who valued the business arrived at a value of $200 million, based upon a cost of equity of 18% and an expected growth rate of 3% a year forever. She has made two mistakes:
The FCFF was computed without considering the salaries that would need to be paid to family members who work at the firm. You estimate that these salaries would amount to $5 million next year, after taxes.
The potential buyer is a publicly traded company, whose investors are diversified. You believe that only 30% of the risk in this company is market risk.
If the risk-free rate today is 3%, the equity risk premium is 6%, estimate the fair value for the firm in this transaction.
A. $ 555.55 million
B. $ 600 million
C. $ 622.22 million
D. $ 684 million

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