You are reviewing the valuation of Vulcan Enterprises, a private business. The analyst has estimated a value of $ $2\mathrm{.}0$ million for the company, which is in stable growth and expected to grow $3\%$ a year in perpetuity. The firm has no debt outstanding and is expected to generate an after$-$tax operating income of $$300,000$ next year; the return on capital is anticipated to be $15\%.$ The analyst valued the company for a private$-$to$-$private transaction, and the cost of equity he estimated is correct, given that setting. $($He used a total beta to estimate the cost of equity, a risk$-$free rate of $4\%,$ and an equity risk premium of $5\%).$

However, the buyer is a publicly$-$traded firm with diversified investors. The average R$-$ squared across publicly traded companies in this business is $25\%.$ Estimate the correct value of Vulcan Enterprises for sale to a public buyer.

Reinvestment Rate:$\_\_\_\_\_\_\_$

FCFF next year:$\_\_\_\_\_\_\_\_$

Cost of Capital$=$ Cost of Equity: $\_\_\_\_\_\_\_$

Ttotal beta $($from cost of capital above$)$:$\_\_\_\_\_\_\_\_$

Market beta:$\_\_\_\_\_\_\_\_$

Cost of Eauity for puiblicly traded:$\_\_\_\_\_\_\_\_\_$

correct Value of the Firm:$\_\_\_\_\_\_\_$