You are thinking of acquiring a company that is not listed on the stock exchange.

You expect that the company will have sales of $5$m at cost of goods sold for the next year $60\%.$ The fixed costs of the company amount to $200,000$ and depreciation to $120,000$

annually. The tax rate is $32\%,$ the same as that of the industry. The company

annually invests $140,000$ in fixed assets and $50,000$ in working capital. The capital structure

of the business is $30\%$ loans, $70\%$ equity and is not expected to change in the future.

You estimate that the Free Cash Flows of the company will grow at a rate of $3\%$ per year in perpetuity. The medium $\backslash$beta of the industry is $1$ with an average debt$/$equity ratio of $1.$ The $10-$year risk$-$free rate is

$5\%$ and the annual expected market return is $11\%.$ The borrowing interest rate of the company is $7\%.$ Calculate the value of the business.