You are going to value Lauryns Doll Co. using the FCF model. After consulting various sources, you
Fantastic news! We've Found the answer you've been seeking!
Question:
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 1.7, a debt-to-equity ratio of .6, and a tax rate of 21 percent. Assume a risk-free rate of 3 percent and a market risk premium of 7 percent. Lauryn’s Doll Co. had EBIT last year of $58 million, which is net of a depreciation expense of $5.8 million. In addition, Lauryn's made $6.3 million in capital expenditures and increased net working capital by $2.5 million. Assume the FCF is expected to grow at a rate of 3 percent into perpetuity. What is the value of the firm?
Related Book For
Fundamentals of Investments, Valuation and Management
ISBN: 978-1259720697
8th edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
Posted Date: