You have been tasked with using the FCF model to value Julie’s Jewelry Co. After your initial review, you find that Julie’s has a reported equity beta of 1.6, a debt-to-equity ratio of .5, and a tax rate of 21 percent. In addition, market conditions suggest a risk-free rate of 5 percent and a market risk premium of 9 percent. If Julie’s had FCF last year of $49.0 million and has current debt outstanding of $123 million, find the value of Julie’s equity assuming a 4.8 percent growth rate in FCF.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You have been tasked with using the FCF model to value Julie’s Jewelry Co. After your initial review, you find that Julie’s has a reported equity beta of 1.6, a debt-to-equity ratio of .5, and a tax rate of 21 percent. In addition, market conditions suggest a risk-free rate of 5 percent and a market risk premium of 9 percent. If Julie’s had FCF last year of $49.0 million and has current debt outstanding of $123 million, find the value of Julie’s equity assuming a 4.8 percent growth rate in FCF. 

(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) 

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