Ex-1 (similar to HW and Kohler) Nevada inc. is a private insurance firm and has two divisions: L&H and P&C. Each division constitutes 50% of the firm. Firm's current FCF = $50M. FCF are expected to grow at 10% and 8% for the next two years. After year 2 growth will become constant at a rate of 5% forever. Nevada inc.'s current leverage ratio is 50% and cost of debt is 8%. Market risk premium is 7% and LT government bond rate is 6%. Investors are trying to value the firm using non-constant FCF growth model. Calculate the value of the firm using the following information. Publicly trade L&H firm Publicly trade P&C firm Leverage TAX Beta XEM 20% 40% 1.4 AFX 50% 40% 1.8 Ex-1 (similar to HW and Kohler) Nevada inc. is a private insurance firm and has two divisions: L&H and P&C. Each division constitutes 50% of the firm. Firm's current FCF = $50M. FCF are expected to grow at 10% and 8% for the next two years. After year 2 growth will become constant at a rate of 5% forever. Nevada inc.'s current leverage ratio is 50% and cost of debt is 8%. Market risk premium is 7% and LT government bond rate is 6%. Investors are trying to value the firm using non-constant FCF growth model. Calculate the value of the firm using the following information. Publicly trade L&H firm Publicly trade P&C firm Leverage TAX Beta XEM 20% 40% 1.4 AFX 50% 40% 1.8