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A firm’s total annual dividend payout is $1 million. Its stock price is $45 per share...

A firm’s total annual dividend payout is $1 million. Its stock price is $45 per share and it has 17,500,000 shares outstanding. The firm earned $4 million in Net Income last year. This year, the firm expects earnings to grow at 7%, with growth the year after that expected to be 5%, and then in all following years, the firm expects earnings to grow at 3%. The firm plans to hold their dividend payout ratio constant over the coming 20 years and beyond. The risk-free rate is 3%, beta for the entire firm is 1.3, and the equity risk premium is 7.75%. What is the value of equity for the entire firm using the FREE CASH FLOW model, using Net Income as free cash flow?

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