Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are going to value Lauryn's Doll Co, using the FCF model. After consulting various sources, you find that Lauryn's has a reported equity beta

image text in transcribed
You are going to value Lauryn's Doll Co, using the FCF model. After consulting various sources, you find that Lauryn's has a reported equity beta of 1.4, a debt-to-equity ratio of .6, and a tax rate of 21 percent. Assume a risk free rate of 4 percent and a market risk premium of 10 percent. Lauryn's Doll Co. had EBIT last year of $43 million, which is net of a depreciation expense of $4.3 million. In addition, Lauryn's made $7 million in capital expenditures and increased networking capital by $4.0 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Futures and Options Markets

Authors: John C. Hull

8th edition

978-1292155036, 1292155035, 132993341, 978-0132993340

More Books

Students also viewed these Finance questions