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undefined S&S is a company that manufactures networking software. In the current year, the firm...

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S&S is a company that manufactures networking software. In the current year, the firm reported operating earnings before interest and taxes of $350 million. The firm spent $60 million on capital expenditures and $25 on working capital. The depreciation expense was $30 million. The earnings, capital expenditures, working capital and depreciation are expected to grow 6 percent for 3 years and levels at 3 percent a year in perpetuity after that. The firm has the following sources of financing:

Debt: 50,000 bonds with a coupon rate of 6 percent, par $1000 and a current price quote of 95 percent of par; the bonds have 10 years to maturity.

120,000 zero coupon bonds, par $1000 with a price quote of 17.5 percent and 20 years until maturity.

Preferred stock: 100,000 shares of 5 percent preferred stock with a current price of $81, and a par value of $100.

Common stock: 2,300,000 shares of common stock; the current price is $45, and the beta of the stock is 1.35.

Market: The corporate tax rate is 30 percent, the market risk premium is 5 percent, and the risk-free rate is 4 percent.

Find the value of the fir

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