Please answer the blue cells!

Chapter 14 Stephenson Real Estate Recapitalization Input area Shares outstanding 16,000,000 Share price $ 46.75 Purchase price of land $ 95.000.000 Perpetual pretax earings increase $ 20,200,000 Current cost of capital 10.50% Cost of new debt 7% Optimal equity weight 70% Optimal debt weight 30% Tax rate 21% Throughout all of this, keep in mind the accounting equation: TA=TL+OE (tot assets tot liabs +own ea) Output area: (Answers in BLUE) 2) Assets Total assets Start off with H21-EB'E7 Equity Debt & Equity 3) a) Perpetual aftertax earnings NPV of purchase E9+value of the perpetuity using E24 and E11 b) Balance Sheet $ Old assets NPV of project (from E26) Total assets Equity Debt & Equity New share price Shares to issue How many new shares should be issued to purchase $96M in land at the new share price? c) Balance Sheet 95,000,000 $ Cash Old assets NPV of project Total assets Equity Debt & Equity $ $ 95,000,000 95,000,000 $ 95,000,000 Total shares outstanding 16,000,000 E35+E7 Share price From E33 above d) PV of earnings increase What is the PV of the perpetuity involving E24? Balance Sheet $ Old assets (from E39) ( PV of project (from E47) Total assets Equity $ Debt & Equity 4) a) Value of levered company Remember that value of a levered firm equals the value of an unlevered firm plus debt times the tax rate b) Balance Sheet $ $ $ Value unlevered (from E52) Tax shield value (debt times tax rate) Total assets 19,950,000 19,950,000 Debt Equity Debt & Equity 95,000,000 (75,050,000) 19,950,000 $ $ Stock price From "Equity and original shares outstanding 5) Stephenson should choose the option which increases the stock value, which in the absence of financial distress costs, will be to issue debt to finance the purchase