Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1.5 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.35 (given its target capital structure). Vandell has $10.76 million in debt that trades at par and pays a 7.1% interest rate. Vandells free cash flow (FCF₀) is $2 million per year and is expected to grow at a constant rate of 6% a year. Vandell pays a 25% combined federal-plus-state tax rate, the same rate paid by Hastings. The risk-free rate of interest is 7%, and the market risk premium is 5%. Hastings first step is to estimate the current intrinsic value of Vandell.

1. What is Vandells cost of equity? Do not round intermediate calculations. Round your answer to two decimal places.

   %

2. What is its weighted average cost of capital? Do not round intermediate calculations. Round your answer to two decimal places.

   %

3. What is Vandells intrinsic value of operations? (Hint: Use the free cash flow corporate valuation model.) Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Do not round intermediate calculations. Round your answer to two decimal places.

   $ million

4. Based on this analysis, what is the minimum stock price that Vandells shareholders should accept? Do not round intermediate calculations. Round your answer to the nearest cent.