[1.] Elliott's Cross Country Transportation Services has a capital structure with 30% debt at a 9% interest rate. Its beta is 1.6, the risk-free rate is 4%, and the market risk premium is 8%. Elliott's combined federal-plus-state tax rate is 25%.

a. What is Elliott's cost of equity? Do not round intermediate calculations. Round your answer to two decimal places.

__________ %

b. What is its weighted average cost of capital? Do not round intermediate calculations. Round your answer to two decimal places.

___________ %

c. What is its unlevered cost of equity? Do not round intermediate calculations. Round your answer to two decimal places.

____________ %

[2.] Richter Manufacturing has an 8% unlevered cost of equity. Richter forecasts the following free cash flows (FCFs), which are expected to grow at a constant 4% rate after Year 3.

Year 1 2 3

FCF $705 $750 $810

What is the horizon value of the unlevered operations? Do not round intermediate calculations. Round your answer to the nearest dollar.

$ _____________

What is the total value of unlevered operations at Year 0? Do not round intermediate calculations. Round your answer to the nearest dollar.

$_____________

[3.] Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1.5 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.60 (given its target capital structure). Vandell has $8.65 million in debt that trades at par and pays a 7.6% interest rate. Vandell's free cash flow (FCF0) is $1 million per year and is expected to grow at a constant rate of 4% a year. Vandell pays a 30% combined federal-plus-state tax rate, the same rate paid by Hastings. The risk-free rate of interest is 6%, and the market risk premium is 6%. Hasting's first step is to estimate the current intrinsic value of Vandell.

a. What is Vandell's cost of equity? Do not round intermediate calculations. Round your answer to two decimal places.

___________ %

b. What is its weighted average cost of capital? Do not round intermediate calculations. Round your answer to two decimal places.

___________ %

c. What is Vandell's intrinsic value of operations? (Hint:Use the free cash flow corporate valuation model.) Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Do not round intermediate calculations. Round your answer to two decimal places.

$____________million

d. Based on this analysis, what is the minimum stock price that Vandell's shareholders should accept? Do not round intermediate calculations. Round your answer to the nearest cent.

$____________/ share