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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