You have been asked to value the Industries, a sports equipment manufacturer and have come up with the following inputs.

Base Year Information (2016)

Earnings before interest and taxes in 20X0 =$600 million

Capital expenditures in 20X0 = $120 million

Depreciation in 20X0 = $100 million

Revenues in 20X0 = $6,000 million

Working capital as percent of revenues = 20%

Tax rate = 40%

High-Growth Phase

Length of high-growth phase = 5 years

Expected growth rate in FCFF=15%

Beta = 1.30

Cost of debt = 8% (pre-tax)

Debt ratio = 30%

Risk-free rate = 7%

Market Risk Premium (MRP) = 6%

Stable-Growth Phase

Expected growth rate in FCFF= 3%

Beta = 1.5

Cost of debt =7% (pre-tax)

Debt ratio = 25%

Risk-free rate = 7%

Market Risk Premium (MRP) = 6%

Required:

a)Estimate the total value of the firm.