Hastings Corporation estimates that if it acquires Vandell Corporation, synergies will cause Vandells free cash flows to be $2.5 million, $2.9 million, $3.4 million, and $3.57 million at Years 1 through 4, respectively, after which the free cash flows will grow at a constant 5% rate.

Hastings plans to assume Vandells $10.82 million in debt and raise additional debt financing at the time of the acquisition. Hastings estimates that interest payments will be $1.5 million each year for Years 1, 2, and 3. Suppose Hastings will increase Vandells level of debt at Year 3 to $30.6 million so that the target capital structure becomes 45% debt. Assume that with this higher level of debt, the interest rate would be 8.5%, and assume that interest payments in Year 4 are based on the new debt level at Year 3 and the 8.5% interest rate.

The Year-4 interest expense is expected to grow at 5% after Year 4.

Vandell currently has 1 million shares outstanding and a target capital structure consisting of 30% debt; its current beta is 1.4 (i.e., based on its target capital structure).

a. What is the Year-4 interest expense? What is the Year-4 tax shield?

b. What is the unlevered value of operations? What is the value of the tax shield?

c. What is the maximum price per share that Hastings would bid for Vandell?

Please answer using Excel and showing Excel formula/syntax