The firm is considering spinning off its vaccine division, which will then operate independently as a separate publicly-listed entity. In its first year, the new entity is expected to have free cash flows equal to the EAA of the vaccine project (from Q4). As the new entity builds up its vaccine pipeline, its cash flows are then expected to grow at a rate of 9% annually. The new entity will take on debt worth $2.1 million from the firm, will not hold any excess cash and will have 5 million shares outstanding. The riskiness of the new entity will be similar to the average riskiness of the firm and the new entity will face the same marginal tax rate as the firm. 4. What is the stock price of the new entity? The firm is considering spinning off its vaccine division, which will then operate independently as a separate publicly-listed entity. In its first year, the new entity is expected to have free cash flows equal to the EAA of the vaccine project (from Q4). As the new entity builds up its vaccine pipeline, its cash flows are then expected to grow at a rate of 9% annually. The new entity will take on debt worth $2.1 million from the firm, will not hold any excess cash and will have 5 million shares outstanding. The riskiness of the new entity will be similar to the average riskiness of the firm and the new entity will face the same marginal tax rate as the firm. 4. What is the stock price of the new entity