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Chapter 16
Input area:
Shares outstanding 12,000,000
Share price 53.80$
Purchase price 49,000,000$
Increase in cash flow 11,500,000$
Current cost of capital 10.50%
YTM on new debt 7.00%
Equity weight in new capital structure 70%
Tax rate 21%
Output area:
3. a) Aftertax earnings increase 9,085,000$
b) Assets 645,600,000$
c) Cash 49,000,000$
Old assets 645,600,000
d) PV of the project 86,523,810$
4. a) Market value of company 742,413,810$
b) Value unlevered 732,123,810$ Debt 49,000,000$
Stephenson Real Estate Recapitalization
