2. Based on your valuation of HFC, do you believe the company was fairly valued by the market before the announcement of the sale? Calculate the WACC for HFC using the data provided in the exhibits; assume a Market Risk Premium of 5.5%. Estimate the stand-alone value ofHFC using the free-cash-flow projections provided in case Exhibit 10.

HERSHEY FOODS CORPORATION: BITTER TIMES IN A SWEET PLACE Forecast Financial Statements of Hershey Foods Corporation as Stand-Alone Entity (in millions of dollars) Source: Case writer estimates. U.S. Treasuries 1 Cadbury Schweppes bonds in British pounds sterling. All other bonds denominated in U.S. dollars