Default free rate and market rate of return

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The EBIT, Depreciation, and tax rate of a firm are $20 million, $2 million and 35% respectively. Its sales rise $5, and its inventory ratio to sales is 40%, while its accounts receivable to sales is 45%, and its accounts payable to sales is 35%. The company pays interest of $3, principal payments of $1.5 and buys $2.5 million of other assets this year. If we know that the company has a growth rate of cash flow of 100% the first year and 2% growth rate after that perpetually, what is its price? We also know that the beta, default free rate and market rate of return are 1, .04 and .09 respectively.

Reference no: EM131343202

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