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Colt Systems will have EBIT this coming year of $18 million. It will also spend $7...

Colt Systems will have EBIT this coming year of $18 million. It will also spend $7 million on total capital expenditures and increases in net working capital and have $4 million in depreciation expenses. Colt is currently an all-equity firm with a corporate tax rate of 30% and a cost of capital of 11%. If Colt’s free cash flows are expected to grow by 9.5% per year, what is the market value of its equity today?

A.

$1,000 million
B.

$1,573.33 million
C.

$1,106.67 million
D.

$640 million
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