* Question Completion Status: QUESTION 21 6 points Save Answer Vision Corporation plans to issue equity to raise $125 million to finance a new investment. After making the investment, Vision expects to earn free cash flows of $24 million each year which is expected to grow at the rate of 1.5%. Vision currently has 8 million shares outstanding and has no other assets or opportunities. Suppose the appropriate discount rate for Vision's future free cash flows is 13%, and the only capital market imperfections are corporate taxes and financial distress costs. (6 marks) a. What is the NPV of Vision's investment? (1 marks) b. Given these plans, what Vision's value per share today? (1 marks) c. Suppose Vision borrows the $125 million instead. The firm will pay interest only on this loan each year, and it will maintain an outstanding balance of $125 million on the loan. Suppose that Vision's corporate tax rate is 45%, and expected free cash flows are still $24 million each year. What is Vision's share price today if the investment is financed with debt? (2 marks) d. Now suppose that with leverage, Vision's expected free cash flows will decline to $16 million per year due to reduced sales and other financial distress costs. Assume that the appropriate discount rate for Vision's future free cash flows is still 13%. What is Vision's share price today given the financial distress costs of leverage? (2 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). Paragraph Arial 14px v : IX % GQ Click Save and Submit to save and submit. Click Save All Answers to save all answers, Save All Answers Save and Submit