eek 7_Closangjch 12 in book) Help Save & Exlt Submit my work mode : This shows what is correct or incorrect for the work you have completed so fer. It does not indicate completion. Return to question Happy Times, Inc, wants to expand its party stores into the Southeast In order to establish an immediate presence in the area, the company is considering the purchase of the privately held Joe's Party Supply Happy Times currently has debt outstariding with a market value of $230 million and a YTM of 8 percent. The company's market capitalization is $370 million, and the required return on equity is 13 percent. Joe's currently has debt outstanding with a market value of $35 million. The EBIT for Joe's next year is projected to be $15 million EBIT is expected to grow at 9 percent per year for the next five years before slowing to 2 percent in perpetuity Net working capital, capital spending, and depreciation as a percentage of EBIT are expected to be 8 percent, 14 percent, and 7 percent, respectively Joe's has 2.3 million shares outstanding. and the tax rate for both companies is 30 percent a. What is the maximum share price that Happy Times should be willing to pay for Joe's? (Do not round intermediate calculations and round your answer to 2 decimel places, e.g. 3216) Maximum share price 3972 O After examining your analysis, the CFO of Happy Times is uncomfortable using the perpetual growth rate in cash flows Instead, she feels that the terminal value should be estimated using the EV/EBITDA multiple. The appropriate EV/EBITDA multiple is 7 b. What is your new estimate of the maximum share price for the purchase? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.) Maximum share price 2301 O Pre 10, 1 il Next 5 RT