You are analyzing a valuation done on a stable firm by a well$-$known analyst. Based on the expected free cash flow to the firm, next year, of $$30$ million, and an expected growth rate of $5\%,$ the analyst has estimated a firm value of $$750$ million. However, he has made a mistake of using the book value of debt and equity is his calculations. Although you do not know the book value weights that he has used, you know that the firm has a cost of equity of $12\%$ and an after$-$tax cost of debt of $6\%.$ You also know that the market value of equity is three times the book value of equity

A$)$ What book value weights did the analyst use?

B$)$ Estimate the correct value for the firm.

Answer is $50\%$ and $545$M$.$ Show steps