You are trying to estimate the brand name value for Steinway, one of the worlds best known piano manufacturers. The firm reported pre-tax operating income of $30M on revenues of $100M in the most recent year. The tax rate is 40%. The book value of capital is $90M, and the cost of capital is 10%. The firm is in stable growth, growing 5% a year in perpetuity.

a. Find the after-tax operating profit margin, return on capital, reinvestment rate, and EV/Sales ratio of Steinway.

b. The operating profit margin for generic piano manufacturers is half that of Steinway. Assuming generic piano makers have the same stable growth rate, cost of capital, and sales turnover as Steinway, find their return on capital, reinvestment rate, and EV/Sales ratio.

c. What is the value of the Steinway brand name?