Two ambitious business graduates, Boris and Isabelle, are considering purchasing Premier Pizza, a frozen pizza manufacturer Forecasted annual sales for the coming year eru $10.3 million, with operating costs equal to 83% of sales, depreciation is 4 of sales, and required annual investment in equipment is 5% of sales Sales, costs, and investments expected to grow 5% in perpetuity On the basis of their analysis of the industry Boris and Isabelle anticipate financing their company with 22 debt The required rate of etiar the debt will be 5 %and the required rate of return on the equity will be 17%. Premier Pizza's corporate tax rate is 35%. The risk-free interest rate s 3% and the market risk pe is 6%

a. What is the maximum price Boris and isabele should be willing to pay for Premia Pizza

b. A national grocery chain, Fresh Foods, is also considering making an offer for Premier Pizza. The levered equity beta of the grocery chain is 0.9, its cost of debt is 4%, it is 37% debt financed, and it has a 35% tax rate. What is the maximum price that Fresh Foods should be willing to pay for Premier Pizza? Assume that Fresh Foods's forecast for Premier's cash flows is the same as Boris and Isabelle's.