Beach & Company Reported Net Income of $40 Million for Last

question 14

Multiple Choice

Beach & Company reported net income of $40 million for last year.Depreciation expense totaled $18 million and capital expenditures came to $8 million.Free cash flow is expected to grow at a rate of 5% for the foreseeable future.Beach faces a 40% tax rate and has a 0.40 debt to equity ratio with $200 million (market value) in debt outstanding.Beach's equity beta is 1.25,the risk-free rate is currently 4.5% and the market risk premium is estimated to be 8.0%.What is the current total value of Beach & Company (in millions) ?

• A)$655.90
• B)$730.18
• C)$840.95
• D)$919.46
• E)$1,025.95

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Definitions:

Long-Term Investments

Assets intended to be held for more than one year, including stocks, bonds, real estate, and other financial instruments.

Financial Markets

Platforms or systems where buyers and sellers engage in the trading of financial assets such as stocks, bonds, currencies, and derivatives.

Benchmark

A standard or point of reference against which things may be compared or assessed.