Impact of Synergies and Capital Structure Changes Crane Rarting Corporation is considering an acquisition of Frost 5ki Supplies. Frost has a pre-merger 8% unievered cost of equity, 6% pre-tax cost of debt, and 25% tax rate. Its premerger forecasted free cash flows and debt are expected to grow at a constant 3% rate after Year 4 . Frost has 900 milion outstanding shares. If Crane makes the acquisation, synergies will increase Frost's free cash flows. Crane will also add debt at Frost's 6% rate. Crape's tax rate is 25%. The post-merger forecasted free cash flows and debt are expected to grow at a constant 3% rate after Year 4. Data for Frost's pre-merger and post-merger FCF and debt are shown here: a. What is frost's pre-merger unlevered horizon value? 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 ansper to two decimal places. 5 million What is its Year-0 unlevered value? Do not round intermediate calculations. Enter your answer in mullions. 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. s milition b. What is Frost's pre-merger horiton value tax shiele? 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 intermodsate colculations, Enter your answer in milions, For example, an answer of $1.23 million should be entered as 1.23 , not 1,230,000. Reund your antwer to two decimat places. 1 millian What is its veac-a tok shieid value? Assume debt is added on the finst day of the vear; that is, calculate interest expenses for Year t tased on debt at Vear t. Do not round intermediate caloviations. Enter your answer in milicons, For example, an answer of 51.23 mallon should be entered as 1.23 , not 1,230,000, Round your anwwer to two dechint pitaces. c. 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 shou 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 millian should be entered as 1.23 , no 1,230,000. Round your answer to two decimal places. 5 milition 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. s d. What is Frost's post-merger unlevered horizon value to Crone? 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. $ miltion What is its Year-D unlevered value? Do not round injermediate 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 e. What is Frost's post-merger horizon value tax shield to Crane? 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 milions. For example, an answer of $1.23 million should be entered as 1.23 , not 1,230,000. Round your answer to two decimal ploces. 3. 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 intermediote calculations, Enter your anwwer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000, Round your aniwer to two decimal places. 1. What is Frost's post-merger Vear-0 valun of levered operations to Crane? (thint/ Remember that Crane assumes Frost's debt and tubsequently issues more debt) Do not round intermediate calculations. Enter your answer in millions. For example, en answer of $1.23 milion should be entered as 1,23, not 1,230,c00, Round vour answer to 1. What is Frost's post-merger Year-0 value of levered operations to Crane? (Hint: Remember that Crane assumes Frost's debt and subsequently issues more debt.) 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 ptaces. 5milision What is its value of equity? (Hint: Remember that Crane assumes Frost's debt and subsequently issues more debt.) 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. s million What is the maximum stock price per share that Crane should offer? Do not round intermediate calculations. Round your answer to the nearset cent. s 9. What percentage of Frost's pre-merger capital structure at Year 4 consisted of debt? (Hint: You already have the values you need to calculate the total value at the horizon.) Do not round intermedlate calculations, Round your answer to two decimal places. % What percentage after the merge at Year 4 ? (Hint: You already have the values you need to calculate the total value at the horizon.) Do not round intermediate celculations. Plound your answer to two decimal placts. 48 How much of Frout's post-merger increase in value to Crane is due to improved FCF? (Hint; You already have calculated the values you need to determine the answer to this question.) Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.23millian should be entered as 1.23 , not 1,2.30,000. Round your onswer to two decimal places. 5. million How much is due to the change in capital structure? (Hint: You already hove calculated the values you need to determine the ansmer to this question.) Do not round intermediate colculations. 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 decinal places. 5 mittion