Note the information provided in the "Background" paragraph is only for the background story and not the mini case itself. The information you need for the mini case starts on the next paragraph -- "Task: use the following information to replicate KKR's biding price decision." Here I simplified the problem. A more reasonable projection is as follows. From 1993, assume that debt will be reduced and maintained at 25% of the value of the firm from that date forward (i.e., D/(D+E) - 0.25). (The 25% figure is consistent with the debt utilization in industries in which RJR Nabisco is involved. In fact, 25% was the debt-to-total-firm-value ratio for RJR Nabisco immediately before management's initial buyout proposal.) Hint: 1. To set up the case, you need to estimate: Unlevered value Vu and Present value of tax shied benefit PV(TS); Then total firm value V = Vu+ PS(TS), equity value E-V-current debt, and price = E/ Number of shares outstanding. 2. We are replicating the valuation of KKR's biding estimation, so your answer should be close to its bidding of $109 per share).