Stuart,Inc

Stuart,Inc.reported net income of $20 million for last year.Depreciation expense totaled $15 million and capital expenditures came to $5 million.Free cash flow is expected to grow at a rate of 6% for the foreseeable future.Stuart faces a 40% tax rate and has a 0.30 debt to equity ratio with $75 million (market value) in debt outstanding.Stuart's equity beta is 1.1,the risk-free rate is currently 6% and the market risk premium is estimated to be 8.0%.What is the current value (in millions) of Stuart's equity?

A) $237.34
B) $352.42
C) $427.42
D) $556.79
E) $689.10

Correct Answer:

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