Lombardi & Co. is a chemical manufacturing company which reported earnings before interest

and taxes of $150 million this year. The firm has a cost of capital of 10%, a tax rate of 40%, and

expects earnings to grow 5% per year in perpetuity. You know that the firm has no working

capital requirements but does have net capital expenditures that it needs for growth. The firm

has return on capital of 12.5% that it expects to maintain in perpetuity.

Estimate the value of the firm