Impact of Synergies and Capital Structure Changes Crane Rafting Corporation is considering an acquisition of Frost Ski Supplies Frost has a pre merger 9 unlevered cost of equity, 7 pre tax cost of debt, and 25 tax rate Its pre merger forecasted free cash flows and debt are expected to grow at a constant 4 rate after Year 4 Frost has 600 million outstanding shares If Crane makes the acquisition, synergies will increase Frost's free cash flows Crane will also add debt at Frost's 7 rate Crane's tax rate is 25 The post merger forecasted free cash flows and debt are expected to grow at a constant 4 rate after Year 4 Data for Frost's pre merger and post merger FCF and debt are shown here Frost Pre merger Year 0 Year 1 Year 2 Year 3 Year 4 FCF (millions) $1,200 $1,400 $1,600 $1,700 $2,000 Debt (millions) $7,800 $8,000 $8,200 $8,300 $8,600 Frost Post merger Year 0 Year 1 Year 2 Year 3 Year 4 FCF (millions) $1,200 $1,500 $1,800 $1,900 $2,200 Debt (millions) $7,800 $21,000 $21,300 $21,400 $21,700 Frost's pre merger unlevered horizon value 41600 in millions Please Answer and Show how you found What is Frost's pre merger horizon value tax shield Assume debt is added on the first day of the year that is, calculate interest expenses for Year t based on debt at Year t Do not round intermediate calculations Enter your answer in millions For example, an answer of $1 23 million should be entered as 1 23, not 1,230,000 Round your answer to two decimal places $ million What is its Year 0 tax shield value Assume debt is added on the first day of the year that is, calculate interest expenses for Year t based on debt at Year t Do not round intermediate calculations Enter your answer in millions For example, an answer of $1 23 million should be entered as 1 23, not 1,230,000 Round your answer to two decimal places $ million What is Frost's current value of levered operations Do not round intermediate calculations Enter your answer in millions For example, an answer of $1 23 million should be entered as 1 23, not 1,230,000 Round your answer to two decimal places $ million What is its value of equity Do not round intermediate calculations Enter your answer in millions For example, an answer of $1 23 million should be entered as 1 23, not 1,230,000 Round your answer to two decimal places $ million What is the minimum stock price per share that Frost's shareholders should accept Do not round intermediate calculations Round your answer to the nearest cent

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Impact of Synergies and Capital Structure Changes Crane Rafting Corporation is considering an acquisition of Frost Ski Supplies. Frost has a pre-merger 9% unlevered cost

Impact of Synergies and Capital Structure Changes

Crane Rafting Corporation is considering an acquisition of Frost Ski Supplies. Frost has a pre-merger 9% unlevered cost of equity, 7% pre-tax cost of debt, and 25% tax rate. Its pre-merger forecasted free cash flows and debt are expected to grow at a constant 4% rate after Year 4. Frost has 600 million outstanding shares. If Crane makes the acquisition, synergies will increase Frost's free cash flows. Crane will also add debt at Frost's 7% rate. Crane's tax rate is 25%. The post-merger forecasted free cash flows and debt are expected to grow at a constant 4% rate after Year 4. Data for Frost's pre-merger and post-merger FCF and debt are shown here:

Frost: Pre-merger	Year 0	Year 1	Year 2	Year 3	Year 4
FCF (millions)	$1,200	$1,400	$1,600	$1,700	$2,000
Debt (millions)	$7,800	$8,000	$8,200	$8,300	$8,600

Frost: Post-merger	Year 0	Year 1	Year 2	Year 3	Year 4
FCF (millions)	$1,200	$1,500	$1,800	$1,900	$2,200
Debt (millions)	$7,800	$21,000	$21,300	$21,400	$21,700

Frost's pre-merger unlevered horizon value:

41600 in millions

Please Answer and Show how you found:

What is Frost's pre-merger horizon value tax shield? Assume debt is added on the first day of the year; that is, calculate interest expenses for Year t based on debt at Year t. Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places.

$ million

What is its Year-0 tax shield value? Assume debt is added on the first day of the year; that is, calculate interest expenses for Year t based on debt at Year t. Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places.

$ million
What is Frost's current value of levered operations? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places.

$ million

What is its value of equity? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places.

$ million

What is the minimum stock price per share that Frost's shareholders should accept? Do not round intermediate calculations. Round your answer to the nearest cent.