Happy Times, Incorporated, 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 prlvately held Joe's Party Supply. Happy Times currently has debt outstanding with a market value of $200 million and a YTM of 5.8 percent. The company's market capltalization is $440 million and the requlred return on equlty is 11 percent. Joe's currently has debt outstanding with a market value of $33.5 million. The EBIT for Joe's next year is projected to be $13 million. EBIT is expected to grow at 8 percent per year for the next five years before slowing to 3 percent in perpetulty. Net. working capltal, capltal spending, and depreclation as a percentage of EBIT are expected to be 7 percent, 13 percent, and 6 percent, respectlvely. Joe's has 2.15 million shares outstanding and the tax rate for both companles is 21 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 decimal places, e.g., 3216.) b. 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 approprlate EV/EBITDA multiple is 11. What is your new estlmate of the maximum share prlce for the purchase? (Do not round intermedlate calculations and round your answer to 2 decimal places, e.g.. 3216.) Happy Times, Incorporated, 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 prlvately held Joe's Party Supply. Happy Times currently has debt outstanding with a market value of $200 million and a YTM of 5.8 percent. The company's market capltalization is $440 million and the requlred return on equlty is 11 percent. Joe's currently has debt outstanding with a market value of $33.5 million. The EBIT for Joe's next year is projected to be $13 million. EBIT is expected to grow at 8 percent per year for the next five years before slowing to 3 percent in perpetulty. Net. working capltal, capltal spending, and depreclation as a percentage of EBIT are expected to be 7 percent, 13 percent, and 6 percent, respectlvely. Joe's has 2.15 million shares outstanding and the tax rate for both companles is 21 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 decimal places, e.g., 3216.) b. 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 approprlate EV/EBITDA multiple is 11. What is your new estlmate of the maximum share prlce for the purchase? (Do not round intermedlate calculations and round your answer to 2 decimal places, e.g.. 3216.)