Question
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
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 1.4, a debt-to-equity ratio of 0.6, and a tax rate of 40 percent. Assume a risk-free rate of 4 percent and a market risk premium of 10 percent. Lauryns 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 net working 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?
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