$3.$ Free Cash Flow Model $($LO$3,$ CFA$2)$You

are going to value Lauryn$$s Doll Co$.$ 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 $\mathrm{.}3,$ and a tax rate of

$21$ percent. Based on this information, what is the asset beta for

Lauryn$$s$?4.$ Free Cash Flow Model $($LO$3,$ CFA$7)$Using

your answer to Problem $3,$ calculate the appropriate discount rate

assuming a risk$-$free rate of $4$ percent and a market risk premium of

$7$ percent$\mathrm{.}5.$ Free Cash Flow Model $($LO$3,$

CFA$7)$Lauryn$$s Doll Co$.$ had EBIT last year of $$40$

million, which is net of a depreciation expense of $$4$ million. In

addition, Lauryn$$s made $$5$ million in capital expenditures and

increased net working capital by $$3$ million. Using the information

from Problem $3,$ what is Lauryn$$s FCF for the year?$6.$ Free Cash Flow Model $($LO$3,$ CFA$7)$Using

your answers from Problems $3$ through $5,$ value Lauryn$$s Doll Co$.$

assuming the company$$s FCF is expected to grow at a rate of $3$

percent into perpetuity. Is this value the value of the equity?