An analyst is evaluating a company based on the information below:

Equity beta $=1\mathrm{.}3,$ risk$-$free rate $=2\%,$ equity risk premium $=7\mathrm{.}4\%$

Cost of debt $=6\mathrm{.}5\%$

Marginal tax rate $=35\%$

Capital structure $=30\%$ debt, $70\%$ equity

Outstanding shares $=200$ million

Long$-$term debt $=$ $$1\mathrm{.}2$ billion

Current free cash flow to the firm $($

F

C

F

F

$0$

$)=$ $$450$ million

The analyst believes that the future growth of the company$$s free cash flow to the firm $($FCFF$)$ can be modelled with the second version of the three$-$stage model where the second stage follows a smooth, linear transition in the growth rate. The forecast growth rates in the first and third stages are as follows.

Years $1$ to $4$: $25\mathrm{.}0\%$ annually

Year $11$ and thereafter: $1\mathrm{.}5\%$ annually

Which of the following is the estimated firm value of the company approximated by H$-$model?

Question $9$ Select one:

a$.$

$$18,781$ million

b$.$

$$15,152$ million

c$.$

$$20,257$ million

d$.$

None of the others