January 1^st 2041, Cool Beans has focused on aggressive growth, but sales have decreased as customers feel that the company has lost touch with its roots. Most of the success of the Cool Beans brand was driven by customers who wanted an alternative to Starbucks and were looking for a cafe with a charming local feel. Under Georges leadership as CEO there are now 37 locations of Crazy Mocha, and 153 locations of Cool Beans, but EBIT per location is only averaging $17,000 annually. Some locations are still profitable, but some are losing money! Sales of bagged coffee has steadily increased and is contributing $5,235,000 annually to EBIT. Contributing your shares to a holding company, Eliot Holdings, and pledging all of your shares of stock as collateral, along with Marner & Bloom Inc. and your Uncle Silas, JP Morgan offers to lend you the money needed to take Cool Beans private in a Leveraged Buyout in order to restructure the company believing that the founder can turn things around.

1. What is the Earnings of Cool Beans after taxes and interest payments are removed? (2pts)

2. Given a 3% projected growth rate and the previously calculated WACC, what would be a fair stock price? (2pts)

3. How much would JP Morgan have to lend in order to buy the outstanding public shares of Cool Beans at $3.00 per share? (3pts)

4. What percentage of Cool Beans do you, Marner & Bloom Inc., and Uncle Silas own? (3pts)

5. What is a fair value for just the bagged coffee division of Cool Beans given a 5% projected growth rate and a WACC of 9%? (3pts)