$15$

Problem $6-6$ Free Cash Flow Model $($LO$3,$ CFA$9)$

$2$

points

You are going to value Lauryn's Doll Company using the FCF model. After consulting various sources, you find that Lauryn's has a

reported equity beta of $1\mathrm{.}4,$ a debt$-$to$-$equity ratio of $0\mathrm{.}6,$ and a tax rate of $21$ percent. Assume a risk$-$free rate of $4$ percent and a market risk premium of $10$ percent. Lauryn's Doll Company had EBIT last year of $$43$ million, which is net of a depreciation expense of $$4\mathrm{.}3$ million. In addition, Lauryn's made $$7$ million in capital expenditures and increased net working capital by $$4\mathrm{.}0$ million. Assume the FCF is expected to grow at a rate of $4$ percent into perpetuity. What is the value of the firm?

Note: Do not round intermediate calculations. Enter your answer in millions rounded to $2$ decimal places.

$\backslash$table$[[$Firm value,$$,308\mathrm{.}39,$million$]]$