- Problem 6-4 Free Cash Flow Model (LO3, CFA7)

Lauryns asset beta is 1.20. Calculate the appropriate FCF discount rate assuming a risk-free rate of 3 percent and a market risk premium of 9 percent. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.

Discount Rate = _______%

- Problem 6-5 Free Cash Flow Model (LO3, CFA7)

Lauryns Doll Co. had EBIT last year of $56 million, which is net of a depreciation expense of $5.6 million. In addition, Lauryns made $5.3 million in capital expenditures and increased net working capital by $2.7 million. Assume that Lauryns has a reported equity beta of 1.7, a debt-to-equity ratio of .4, and a tax rate of 21 percent. What is Lauryns FCF for the year?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

FCF = _____ million

- Problem 6-6 Free Cash Flow Model (LO3, CFA7)

You are going to value Lauryns Doll Co. using the FCF model. After consulting various sources, you find that Lauryn's has a reported equity beta of 1.7, a debt-to-equity ratio of .7, and a tax rate of 21 percent. Assume a risk-free rate of 3 percent and a market risk premium of 8 percent. Lauryns Doll Co. had EBIT last year of $59 million, which is net of a depreciation expense of $5.9 million. In addition, Lauryn's made $7.3 million in capital expenditures and increased net working capital by $2.4 million. Assume the FCF is expected to grow at a rate of 4 percent into perpetuity. What is the value of the firm? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Firm Value = ________ million