Harrison Corporation is interested acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 5% and the market risk premium is 6%.

Harrison estimates that if it acquires Can Buren, the year-end dividend will remain at $2.00 a share, but synergies will enable the dividend to grow at a constant rate of 7% a year (instead of the current 5%). Harrison also plans to increase the debt ratio of what would be its Van Burden subsidiary-the effect of this would be to raise Van Buren