please DO NOT USE AI OR CHATGPT.

show calculations.

You are the owner of a privately$-$owned paper company with net debt of zero and an expected after$-$tax cash flow of $$10$ million next year, anticipated to grow $3\%$ a year in perpetuity. You have been approached by a venture capitalist, offering you $$25$ million for a $25\%$ stake in the firm. You know that the venture capitalist has holdings primarily in manufacturing companies and that the correlation of the VC$$s portfolio with the market is $0\mathrm{.}60.$ If you believe that the VC$$s offer is a fair

one, estimate what the company would be worth if you decided to go public instead. $($The risk$-$free rate is $3\%$ and the market equity risk premium is $5\%).$

A$.$ $ $112\mathrm{.}28$ million

B$.$ $ $133\mathrm{.}62$ million

C$.$ $ $144\mathrm{.}62$ million

D$.$ $ $166\mathrm{.}67$ million