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Tigers Ltd has $100 million in debt outstanding, in both book value and market value terms, and expects to maintain a debt ratio of 40%. The beta of the stock is 1.10 currently, equity risk premium is 5.5% and the current long-term bond rate is 7.5%. The firm is in stable growth and expects to grow 5% a year in perpetuity. The capital expenditures in the latest year were $10 million, and there is no working capital requirement. The latest income statement of Tigers Ltd is provided below:
Item
Amount ($ in millions)
Revenues
100
COGS
60
Depreciation
10
EBIT
30
Interest expense
EBT
20
Taxes
8
Net Income
12
Use this data to estimate the value of Tigers Ltd.
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