The MoMi Corporation’s income before interest, depreciation and taxes, was $2.0 million in the year just ended, and it e

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The MoMi Corporation’s income before interest, depreciation and
taxes, was $2.0 million in the year just ended, and it expects that
this will grow by 5% per year forever. To make this happen, the
firm will have to invest an amount equal to 20% of pretax cash flow
each year. The tax rate is 30%. Depreciation was $260,000 in the
year just ended and is expected to grow at the same rate as the
operating cash flow. The appropriate market capitalization rate for
the unleveraged cash flow is 10% per year, and the firm currently
has debt of $4 million outstanding. Use the free cash flow approach
to calculate the value of the firm and the firm’s equity. (Enter
your answer in dollars not in millions.)