Problem:
Lemmon has EAT, depreciation expense, capital expenses and debt principal payments of $4m, $.2m, $.3m, and $.5m respectively. Between the first and the second years, it has current assets of $11m and $11.4m and current debts of $5m and $5.1m respectively. Its unlevered bheta, D/E and t are 2, 60/40 and .25 respectively. The t bond rate is 2% and the risk premium is 7% Lemmon's ROE is 20%, and it plows about 30% of its profits back into its business.
Required:
Question: Derive the value of Lemmon.
Note: Provide support for your rationale.