K 18.5 Assume that you have been asked to place a value on the fund capital (equity) of Best Health, a not-for-profit health maintenance organization (HMO). Its projected profit and loss statements and equity reinvestment (a 9 requirements are as follows (in millions): Net revenues Cash expenses Depreciation Interest Net profit Asset 2016 29 2018 2019 2020 $50.0 $52.0 $54.0 $57.0 $60.0 45.0 46.0 47.0 48.0 49.0 3.0 3.0 4.0 4.0 4.0 1.5 1.5 2.0 2.0 2.5 $ 0.5 $ 1.5 $ 1.0 $ 3.0 $ 4.5 $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4 quirements The cost of equity o@ilar for-profit HMOs is 14 percent, while the best estimate for Best Health's long-term growth rate is 5 percent. a. What is the equity value of the HMO? b. Suppose that it was not necessary to retain any of the operating income in the business. What impact would this change have on the equity value