Funding Inc, has the following financing outstanding:

• Debt: 300,000 bonds with a coupon rate of 4.0% and a current price of 120% of par. The bonds have 20 years to maturity and a par value of $1,000. The bond has semiannual compounding.

• Equity: 2.7 million shares of common stock with a current price of $130 per share and the beta of the stock is 1.19.

• Market: The corporate tax rate is 21%, the expected market return is 9.5%, and the risk- free rate is 0.02%.

  Funding Inc is considering purchasing Affluent Inc, a privately-held equity firm. Affluent Inc currently has debt outstanding with a market value of $15 million. The EBIT for Affluent Inc next year is projected to be $13 million. EBIT is expected to grow at 9% per year for the next five years before slowing to 2% in perpetuity. Change in Net Working Capital, Capital Spending, and Depreciation as a percentage of EBIT are expected to be 5%, 4%, and 6%, respectively. Affluent Inc has 12.5 million shares outstanding and the tax rate is 21%

1. What are the Cash Flows for Affluent Inc expected to be in Years 1 - 5 (i.e., what is CF(A) for Years 1 - 5)?

2. What is the terminal value of Affluent Inc's cash flows?

3. What is the total value of Affluent Inc worth to Funding Inc today?

4. What is the value of Affluent Inc equity?

5. What is the maximum price per share Funding Inc should be willing to pay for Affluent Inc?