The MoMi Corporation’s cash flow from operations before interestand taxes was $3 million in the year just ended, and it expectsthat this will grow by 5% per year forever. To make this happen,the firm will have to invest an amount equal to 15% of pretax cashflow each year. The tax rate is 35%. Depreciation was $250,000 inthe year just ended and is expected to grow at the same rate as theoperating cash flow. The appropriate market capitalization rate forthe unleveraged cash flow is 8% per year, and the firm currentlyhas debt of $4.5 million outstanding. Use the free cash flowapproach to value the firm’s equity. (Round answer tonearest whole number. Enter your answer in dollars not inmillions.)
