: Use the capital asset pricing model $t$o determine the value of a firm with the following characteristics:

risk free rate

$1\mathrm{.}00\%$

risk premium

$8\mathrm{.}00\%$

Before tax return on capital in fast growth years is $30\%.$

Before tax return on capital in slow growth is $14\%$

It costs the company $7\%$ for any money that it borrows and its current debt.

Tax Rate $25\%$

The company plans to reinvest $65\%$ in the growth years. When the company's growth slows, they will have to decrease their reinvest rate to $20\%.$

The company's debt to capital ratio is $40\%.$

Length of growth Period $8$ years

Current initial operating Income $($EBIT$)$ $$100$

Beta for company $2\mathrm{.}2$