Hargrove, Inc. manufactures industrial valves. Hargrove has expected Sales of $133,674$ per year. SG&A and COGS make up about $$0\mathrm{.}95$ of every dollar of Sales in a typical year. Sales growth is expected to be flat. As a result, Hargrove expects CAPEX to be equal to depreciation expense going forward, and they do not expect to any investments in working capital. Hargrove has assets worth about $10,000.$ Hargrove$$s firm beta is $4\mathrm{.}53.$ The market risk premium is $5\%$ and the risk free rate is $5\%.$Currently, Hargrove, Inc. is financed with $100\%$ equity and has $1,000,000$ shares outstanding. Hargrove is considering a $$debt for equity swap$.$ A debt for equity swap involves a firm issuing debt and using the proceeds to pay a $$special dividend$$ to equity holders.Hargove$$s CFO Karen Fich has told Mike that she thinks that Hargrove could manage a debt load of about $33\%$ of the firm$$s total capitalization. She has spoken to several banks and received favorable reaction. She estimates from talking to the bankers that the debt will have an interest rate of $11\%$ and a $30$ year term. Karen expects that the debt will have a beta of $0\mathrm{.}38.$

$1.$ How much will the equity holders receive in the special dividend?

$2.$ What will Hargrove$$s cost of debt be$?$ Please place Hargrove$$s cost of debt on the schematic.

$11.$ What will Hargrove$$s beta of equity be$?$ What will their cost of equity be$?$

$3.$ What will Hargrove$$s firm beta be after the swap?

$4.$ Please use the discount rates of equity and debt to compute Hargrove$$s WACC after the $$swap$.$

$5.$ What will Hargrove, Inc be worth after the $$swap$?$

$6.$ What is the price per share of Hargrove$$s equity after the swap?