ValExpress is interested in acquiring PrivCo, whose owner desires to retire. The firm is $100\%$ owned by the current owner. PrivCo has revenues of $$10$ million and EBIT of $$2$ million. The value of the firm's debt is $$5$ million; the book value of equity is $$4$ million. For publicly traded firms in the same industry, the average market value of debt$-$to$-$equity ratio is $0\mathrm{.}40$; the marginal tax rate is $40\%.$ Typically, the ratio of the market value of equity to book value of equity for these firms is $2.$ The average beta of publicly traded firms that are in the same business is $2.$ Capital expenditures and depreciation amount to $$0\mathrm{.}3$ million and $$0\mathrm{.}2$ million respectively. Both items are expected to grow at the same rate as revenues for the next $5$ years and they are offsetting thereafter $($i$.$e$.,$ capital spending will then be internally funded$).$ As a result of excellent working capital management, the change in working capital is expected to be essentially zero throughout the forecast period and beyond. The revenues $($and net income$)$ of the firm are expected to grow to $15\%$ annually for the next $3$ years, $10\%$ annually for the next two years $($transition period$),$ and $5\%$ per year thereafter. The beta of the firm is expected to drop by $0\mathrm{.}21$ in the transition and by a further $0\mathrm{.}29$ in the stable period. The $10-$year government bond rate, which is considered to be appropriate for valuing this firm, is $6\%.$ The pre$-$tax cost of debt for a similar non$-$rated firm is $10\%$ and the firm's tax rate is $40\%.$ The market risk premium is $5\mathrm{.}5\%.$ No adjustment is made in the calculation of cost of equity for a marketability discount.