Problem:
Assume another company had the following information related to the free cash flows to equity holders in amount of $1.5 million a year from now and also growing at the same rates as given above. The cost of equity is 12%.
Required:
Question: What will be the value of equity of the firm? What will be the value of the company if it has a debt of $7.5 million?
Note: Please provide equation and explain comprehensively and give step by step solution.