Mitsui Transport, a Japanese logistics firm, recently reported the following

results $($in $$ billions$)$:

Mitsui also reported an earnings before interest and taxes $($EBIT$)$ loss of $167\mathrm{.}2$

billion, however this poor operating performance is expected to be temporary.

Mitsui's competitors have an average return on invested capital $($ROIC$)$ of $14\mathrm{.}3\%.$

In addition, the book value of Mitsui$$s invested capital is $2,490\mathrm{.}0$ billion, of

which $675\mathrm{.}0$ billion is land. The market value of this land is $4,289\mathrm{.}7$ billion.

Japan's corporate tax rate is $32\mathrm{.}0\%.$

You are attempting to estimate the market value of Mitsui's equity and have

made the following assumptions:

Revenue will grow at $5\mathrm{.}0\%$ in each of the next $5$ years before reaching a stable

$3\mathrm{.}5\%.$ EBIT growth will be $6\mathrm{.}0\%$ in each of the next $5$ years before reaching a

stable $3\mathrm{.}5\%.$ Capital expenditure and depreciation are expected to grow at $6\mathrm{.}0\%$

and $12\mathrm{.}0\%,$ respectively, for the next five years; thereafter, you expect that

capital expenditure will be offset by depreciation.

The Company's current cost of debt is $5\mathrm{.}0\%($pre$-$tax$),$ its beta is $1\mathrm{.}30.$ Once the

Company reaches stable growth the Company's beta will be $1\mathrm{.}10,$ the pre$-$tax

cost of debt will be $4\mathrm{.}0\%.$ Mitsui's debt to capital ratio is expected to remain

constant at $22\mathrm{.}0\%.$ The risk free rate is $3\mathrm{.}0\%$ and the market risk premium is $5\mathrm{.}0\%.$

$($i$)$ Value Mitsui's equity. State your assumptions.

$(20$ marks$)$