In: Finance
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 1.7, a debt-to-equity ratio of .5, and a tax rate of 21 percent. In addition, market conditions suggest a risk-free rate of 6 percent and a market risk premium of 9 percent. If Julie’s had FCF last year of $52.0 million and has current debt outstanding of $129 million, find the value of Julie’s equity assuming a 5.2 percent growth rate in FCF. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.
Assuming the debt is risk free for Julie's ie Cost of debt = 6% (since no cost of debt is provided in the Q)
Value of Equity = $ 388.05 M
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