I need help with this case study please, from essentials of corporate finance (9781259277214) The ninth edition.

PART 7 454 Stephenson Real Estate Recapitalization CHAPTER CASE tephenson Real Estate Company was founded annual pretax earnings by $12 million in pe in Weyand, the company's new CFo, has been put 25 years ago by the current Robert has determined that the com con The company purchases real CEO, of the project. Kim She few thatthe i estate, including land and cost of capital is 12.5 percent. it included debt buildings, and rents property to tenants. The com pany would be more valuable if pany has shown a profit every year for the past 18 years. structure, so she evaluating whether th com. nd the shareholders are satisfied with the Company capital finance the management. Prior to founding Stephenson Real Estate, pany should issue debt to Robert the founder and CEO of failed alpaca farm Based on some conversations with investment banks she ng operation. The resulting bankruptcy made him ex- thinks that the company issue bonds with tremely averse to debt financing. As a result, the coupon rate of 8 percent. From her analysis, sh also company is entirely equity financed, with 9 million believes a capital structure in the range of 70 percent that shares of common stock outstanding. The stock cu equity i30 percent debt would be optimal. If the company rently trades at $42.50 per share goes beyond 30 percent debt, its bonds would carry pos. Stephenson is evaluating a plan to purchase a huge lower rating and a much higher coupon because the tract the southeastern United States for $50 mil sibility of financial distress and the associated costs would lion. The land will subsequently be leased to tenant farm- rise sharply. Stephenson has a 40 percent corporate tax ers. This purchase is expected to increase Stephenson's rate (state and federal QUESTIONS If Stephenson wishes to maximize its total marke shares of common stock does Stephenson value, would you recommend that it issue debt or have outstanding? What is the price per equity to finance the land purchase? Explain. of the firm's stock? 2. Construct Stephenson's market value balance d. Construct Stephenson's market value bat sheet before it announces the purchase ance sheet after the purchase has been 3. Suppose Stephenson decides to issue equity to finance the purchase. made 4. Suppose Stephenson decides to issue debt to What is the net present value of the project? nance the purchase b. Construct Stephenson's market value bal a. What will the market value of Stephenson the ance sheet after it announces that the firm is financed wth will finance the purchase equity. What using uld be the new price per share of the firm's Company be if the purchase debt? stock? How many shares will Stephenson b. Construct Stephenson's market value need to issue to finance the purchase? ance sheet after both the debt issue c. Construct Stephenson's market value bal and purchase. What is the price per share ance sheet after the equity issue but before the purchase has been made. How many 5. firm's stock? stock price of of financing madmizes the pe stephenson's equity