In the year prior to going public, a firm has revenues of $20 million and net income after taxes of $2 million. the firm has no debt, and revenue is expected to grow at 20% annually for the next five years and 5% annually thereafter. net profit margins are expected remain constant throughout. capital expenditures are expected to grow in line with depreciation and working capital requirements are minimal. the average beta of a publicly traded company in this industry is 1.50 and the average debt/equity ratio is 20%. the firm is managed very conservatively and does not intend to borrow through the foreseeable future. the treasury bond rate is 6% and the tax rate is 40%. the normal spread between the return on stocks and the risk free rate of return is believed to be 5.5%. reflecting the slower growth rate in the sixth year and beyond, the discount rate is expected to decline by 3 percentage points. estimate the value of the firm’s equity.