Question: You are going to value Simpson Co. using the FCF model. After consulting various sources, you find that the company has a reported equity beta

You are going to value Simpson Co. using the FCF model. After consulting various sources, you find that the company has a reported equity beta of 1.4, a debt-to-equity ratio of .3, and a tax rate of 40 percent. Assume a risk-free rate of 1.5 percent and a market risk premium of 7 percent. Simpson Co. is expected to have EBIT of $45 million, which is net of a depreciation expense of $4.5 million. In addition, Lauryn made $4.25 million in capital expenditures and decreased net working capital by $4.1 million. Assume the companys FCF is expected to grow at a rate of 2 percent into perpetuity. What is the value of the firm?

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