Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.4 (given its target capital structure). Vandell has $10.82 million in debt that trades at par and pays an 8% interest rate. Vandell's free cash flow (FCFo) is $2 million per year and is expected to grow at a constant rate of 5% a year. Vandell pays a40% combined federal and state tax rate. The risk-free rate of interest is 5% and the market risk premium is 6%. Hasting's first step is to estimate thecurrent intrinsic value of Vandell.

a. What are Vandell's cost of equity and WACC?

b. What is Vandell's instrinsic value of operations?

c. What is the current intrinsic value of Vandell's stock?