[miska090]

The active message company has an after tax operating income of $10 million in its most recent year. It capital expenditures were 40% of operating income and the depreciation was 40% of the operating earnings. The operating earnings, capital expenditures and depreciation are expected to grow at 18% per year for the next three years. After that they are expected to grow at a sustainable growth rate, which is consistent with the firms ROC(return on capital) of 20% and it reinvestment rate of 40%. Assuming that the firm has a cost of capital of 10%, what is the value of the firm?