14.5.

(a) The following exhibit shows that the proposed recapitalization is feasible.

SM Holdings Revised Projected Cash Flows Year 0 1 2 3 4 5 EBIT (g = 5.0%) 300 160 168 176 185 194 Interest expense Senior 8.0% 78 46 41 36 30 Sub 10.0% 75 17 17 17 17 7 105 118 138 147 Tax 35.0% 2 37 41 46 51 Net after tax 5 68 77 86 96 Debt amortization:

Senior 80 63 63 63 63 Subordinated 0 0 0 0 0 Cash balance 0 5 19 42 75 Debt balance:

Senior 650 570 507 444 381 318 Subordinated 500 172 172 172 172 172 1150 742 679 616 553 490