Merger Valuation

Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt. Vandell's debt interest rate is 7.8%. Assume that the risk-free rate of interest is 5% and the market risk premium is 5%. Both Vandell and Hastings face a 35% tax rate.

Hastings estimates that if it acquires Vandell, interest payments will be $1,500,000 per year for 3 years after which the current target capital structure of 30% debt will be maintained. Interest in the fourth year will be $1.428 million after which interest and the tax shield will grow at 4%. Synergies will cause the free cash flows to be $2.3 million, $2.9 million, $3.5 million, and then $4.00 million in Years 1 through 4, respectively, after which the free cash flows will grow at a 4% rate. What is the unlevered value of Vandell? Vandell's beta is 1.60. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. Do not round intermediate calculations.

A) $ ______ million

B) What is the value of its tax shields? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. Do not round intermediate calculations.

$_____ million

C) What is the per share value of Vandell to Hastings Corporation? Assume Vandell now has $8.05 million in debt. Round your answer to the nearest cent. Do not round intermediate calculations.

$ _______ per share