1. Solace company is operating in a declining industry. The company's current free cash flow is $5 million. The free cash flows are expected to decrease 5 percent per year in the future. The cost of capital is 9.6 percent. Solace company currently has 1.8 million shares of stock outstanding and $10 million in debt outstanding. What is the maximum price per share an investor would pay for Solace company?

		$13.75
		$13.34
		$12.93
		$12.52
		$12.11

2. J&J is currently an all equity firm. However, the company intends to issue $20 million of long term debt at 6% interest rate and $15 million of short term debt at 24.0% interest rate, and use the proceeds to repurchase shares. The company will keep these debts in its capital structure permanently. The corporate tax rate is 20%. What is the present value of the interest tax shield (in $ million)?

		$9.10
		$8.75
		$8.40
		$8.05
		$7.70