Problem $18-15$ APV, FTE, and WACC

Summers, Incorporated, is an unlevered firm with expected annual earnings before taxes of $$32\mathrm{.}5$ million in perpetuity. The current required return on the firm$$s equity is $14$ percent$$and the firm distributes all of its earnings as dividends at the end of each year. The company has $2\mathrm{.}3$ million shares of common stock outstanding and is subject to a corporate tax rate of $25$ percent. The firm is planning a recapitalization under which it will issue $$41$ million of perpetual $6\mathrm{.}5$ percent debt and use the proceeds to buy back shares.

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a$-1.$

Calculate the value of the company before the recapitalization plan is announced. $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to the nearest whole number, e$.$g$.,1,234,567.)$

a$-2.$What is the price per share? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$b$-1.$Use the APV method to calculate the company value after the recapitalization plan is announced. $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to the nearest whole number, e$.$g$.,1,234,567.)$b$-2.$What is the price per share after the recapitalization is announced? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$c$-1.$How many shares will be repurchased? $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to the nearest whole number, e$.$g$.,1,234,567.)$c$-2.$What is the price per share after the recapitalization and repurchase? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$d$.$Use the flow to equity method to calculate the value of the company$$s equity after the recapitalization. $($Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded$$to the nearest whole number, e$.$g$.,1,234,567.)$