You have been given the following projections for Magnum Limited:

Compute the enterprise value of Magnum Limited using the following assumptions:

• Beyond year 5, the cash fl ow to the fi rm of Magnum Limited will grow at a constant

rate of 10 percent per annum

• Magnum’s unlevered cost of equity is 15 percent and its borrowing rate will be 12 percent

• After year 5, Magnum will maintain a debt-equity ratio of 1:2.

• The tax rate for Magnum is 30 percent

• The risk-free rate is 7 percent

• The market risk premium is 8 percent

Calculate the enterprise value of Magnum Limited.