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You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources,...

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Finance

You are going to value Lauryn’s Doll Co. using the FCF model.After consulting various sources, you find that Lauryn's has areported equity beta of 1.7, a debt-to-equity ratio of 0.4, and atax rate of 30 percent. Assume a risk-free rate of 6 percent and amarket risk premium of 11 percent. Lauryn’s Doll Co. had EBIT lastyear of $56 million, which is net of a depreciation expense of $5.6million. In addition, Lauryn's made $5.3 million in capitalexpenditures and increased net working capital by $2.7 million.Assume the FCF is expected to grow at a rate of 3 percent intoperpetuity. What is the value of the firm? (Do not roundintermediate calculations. Enter your answer in millions rounded to2 decimal places.)

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Calculation of Asset Beta Asset Beta Equity Beta 1 1 Tax DebtEquity Ratio Asset Beta 170 1 1 030 040 Asset Beta 170 128 Asset Beta 133 Calculation of Cost of    See Answer
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You are going to value Lauryn’s Doll Co. using the FCF model.After consulting various sources, you find that Lauryn's has areported equity beta of 1.7, a debt-to-equity ratio of 0.4, and atax rate of 30 percent. Assume a risk-free rate of 6 percent and amarket risk premium of 11 percent. Lauryn’s Doll Co. had EBIT lastyear of $56 million, which is net of a depreciation expense of $5.6million. In addition, Lauryn's made $5.3 million in capitalexpenditures and increased net working capital by $2.7 million.Assume the FCF is expected to grow at a rate of 3 percent intoperpetuity. What is the value of the firm? (Do not roundintermediate calculations. Enter your answer in millions rounded to2 decimal places.)

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