You are reviewing the valuation of 1Vulcan Enterprises, a private business. The analyst has estimated a value of S 2.0 million for the company, which is in stable growth and expected to grow 3% a year in perpetuity? The firm has no debt outstanding and is expected to generate after tax operating income of SBDDfiDD next year; the return on capital is anticipated to he 15%? 

The analyst valued the company for a private to-private transaction= and the cost of equity he estimated is correct= given that setting. {He used a total beta to estimate the cost of equity= a riskfree rate of 4% and an equity risk premium?

Answer rating: 100% (QA)

The analysts valuation is reasonable given the assumptions and expected future performance of th... View the full answer