6. (10 points) Please use 1 decimal place throughout all answers, except value per share! After careful analysis, an acquisition candidate is expected to generate the following cash flows:

Year CF ($ millions)

1 $ 25.2

2 54.0

3 68.5

4 81.9

5 98.1

A. If the cost of capital is 9.75%, what is the present value of these cash flows?

Further assume, this company expects the cash flows after year 5 to continue into perpetuity by growing at 2.50% each year. What is the residual value in year 5 and its present value today?

Residual Value in Year 5?

Present Value of the Residual Value?

Given your answers to Parts A and B, what is the total value of this acquisitions operations?

Assuming debt of $320.0 million and cash of $51.9 million, what is the value of this firms equity in total and per share? There are 21.5 million shares outstanding.

Total Equity Value Value Per Share 2 Decimal Places!