A group of Investors is intent on purchasing a publicly traded company and wants to estimate the highest price they can

reasonably justlfy paying. The target company's equity beta is $1\mathrm{.}20$ and its debt$-$to$-$firm value ratio, measured using market

values, is $60$ percent. The investors plan to Improve the target's cash flows and sell It for $12$ times free cash flow in year five.

Projected free cash flows and selling price are as follows.

To finance the purchase, the investors have negotlated a $$540$ million, five$-$year loan at $8$ percent interest to be repald in

five equal payments at the end of each year, plus Interest on the declining balance. This will be the only Interest$-$bearing

debt outstanding after the acquisition.

a$.$ Estimate the target firm's asset beta.

Note: Round your answer to $2$ decimal places.

Target firm's asset beta

b$.$ Estimate the target's unlevered, or all$-$equity, cost of capital $(K_A).$

Note: Round your answer to $1$ decimal place.

Target's unlevered, or all$-$equity, cost of capital $($KA$)$

c$.$ Estimate the target's all$-$equity present value.

Note: Enter your answer In millions rounded to $2$ decimal places.

Target's all$-$equity present value

million

d$.$ Estimate the present value of the Interest tax shields on the acquisition debt discounted at $K_A.$

Note: Round Intermedlate calculations to $2$ decimal places. Enter your answer In millilons rounded to $2$ decimal

places.