Lambert Corporation Reported EBIT of $60 Million for Last Year

question 9

Multiple Choice

Lambert Corporation reported EBIT of $60 million for last year. Depreciation expense totaled $20 million and capital expenditures came to $5 million. Free cash flow is expected to grow at a rate of 4.5 percent for the foreseeable future. Lambert faces a 21 percent tax rate and has a .45 debt to equity ratio with $255 million (market value) in debt outstanding. Lambert's equity beta is 1.30, the risk-free rate is currently 5 percent, and the market risk premium is estimated to be 6.5 percent. What is the current total value of Lambert's equity (in millions) ?

• A)$655.90
• B)$731.20
• C)$908.89
• D)$951.26
• E)$1,025.95