Question
In: Finance
You have been tasked with using the FCF model to value Julie’s Jewelry Co. After your...
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.
Solutions
Expert Solution
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
Formulae
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