Assume you are trying to find an estimate of PrintTronics Inc.'s share price using the flow to equity method. PrintTronics' current EBIT is $2 million. The firm's tax rate is 40% and the firm's current beta is 1.265. You estimate that the market risk premium is 6% and the current risk-free rate is 4%. The firm has $3,000,000 in perpetual debt outstanding with a cost of 8%, the firm has 250,000 shares outstanding, and you expect the firm's levered cash flow to grow at 3% forever.
A. What is the firm's levered cost of equity?
B. What is the value of the firm's equity?
C. What is your estimate of the firm's share price?