Your company is expected to generate free cash flows (FCF) of $1 million next year (exactly one year from today). After that, FCF is expected to grow at 2% every year forever, (so two years from today, the expected FCF is $1.02 million, etc.).

The company's asset beta is 1, and it faces a tax rate of 30%.

The firm currently has a leverage ratio of 40% (measured as the ratio of net debt to the sum of net debt plus equity, measured in market values), and it intends to stay at this leverage ratio for the foreseeable future. At this leverage ratio, the company's debt beta is 0.4.

The risk-free rate is 3% for all maturities, and the market premium is 6%.

Assuming taxes are the only market imperfection, the company's market value of equity is closest to:

		$8.6 million.
		$9.4 million.
		$9.6 million.
		$15.7 million.