The question is in bold and the answer is below it. I am having a hard time understanding the process of solving this problem.

Mr. Zapatos, CEO of Shoes Inc., has identified Laces Ltd. as a possible acquisition candidate and a good strategic fit for the organization. Laces Ltd. has $100 million in assets and $20 million in par-value debt on the books. It currently trades for $35 per share on the open market and has 3 million common shares outstanding. The current fiscal year closed yesterday with Laces Ltd. earning $10.50 M before interest and taxes (EBIT). After allowing for changes in NWC, taxes, depreciation, and capital expenditures, Laces Ltd. had $6.01 M in debt-free cash flows (cash flow from assets). Analysts expect their CFA to grow at 20% for the next two fiscal years and then settle down to a 5% annual growth rate thereafter. Laces Ltd.s investors demand a return of 15% for similar risk assets. Using the WACC-DCF approach, how much should Shoes Inc. should be willing to pay per share to acquire Laces Ltd? CFA1 = $6.01 M x 1.20 = $7.21 M CFA2 = $6.01 M x 1.202 = $8.65 M Continuing Value = [$6.01 M x 1.202 x 1.05] / [0.15 0.05] = $90.87 M MVA = ($7.21M/1.15) + ($8.65/1.152) + (90.87/1.152) = $81.52M MVE = $81.52 M $20.00 M = $61.52 M Price per share = $61.52 M / 3 M = $20.51 / share Question 10: After reading all about the tax advantages of having a high leverage ratio, the CEO of LevCo is considering a leveraged recapitalization and wants to know the value of his firm subsequent to the recap. The firm currently has $27 million in assets and $12 million in debt and is interested in taking on an additional $9 million in debt. LevCos debt yields 8% and is expected to remain at $21 M per year in perpetuity. LevCo is expected to produce unlevered cash flows next year of $5 million per year, growing at 3% annually. LevCos closest competitor, a pure-play firm in the same business as LevCo, has a debt-to-equity ratio of 0.5 and an equity beta of 1.25. Ten-year treasuries currently yield 2.3% and the expected return on the S&P 500 is 10.0% per annum. The marginal corporate tax rate is 40%. Using the information above regarding LevCo and if you discount the interest tax shields at the unlevered cost of equity, what is the value of the enterprise (market value of assets) using the APV method? Enter your response in millions, rounded to two decimal places.

BetaUnlevered = (1.25) / [1 + (1-0.40)(0.50)] = 0.9615

Cost of Unlevered Equity Capital = 2.3% + [0.9615 x (10.0% 2.3%)] = 9.70%

Value of CFA = $ 5M / (0.0970 0.0300) = $74.63 M

Current Debt = $12M + $9M = $21 million

Interest Tax Shield = $21.0 M x 0.08 x 0.40 = $0.672 M

Value of Tax Shield = $0.672 M / 0.0970 = $6.93 M

Value of LevCo = $74.63 M + $6.93 M = $81.56 M