Summers, Inc., is an unlevered firm with expected annualearnings before taxes of $27.3 million in perpetuity. The currentrequired return on the firm’s equity is 13 percent and the firmdistributes all of its earnings as dividends at the end of eachyear. The company has 2.04 million shares of common stockoutstanding and is subject to a corporate tax rate of 22 percent.The firm is planning a recapitalization under which it will issue$37.1 million of perpetual 6.2 percent debt and use the proceeds tobuy back shares.

a-1. Calculate the value of the company before therecapitalization plan is announced. (Do not round intermediatecalculations and enter your answer in dollars, not millions ofdollars, rounded to the nearest whole number, e.g., 1,234,567.)

a-2. What is the price per share? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)

b-1. Use the APV method to calculate the company value after therecapitalization plan is announced. (Do not round intermediatecalculations and enter your answer in dollars, not millions ofdollars, rounded to the nearest whole number, e.g., 1,234,567.)

b-2. What is the price per share after the recapitalization isannounced? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)

c-1. How many shares will be repurchased? (Do not roundintermediate calculations and enter your answer in dollars, notmillions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)

c-2. What is the price per share after the recapitalization andrepurchase? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)

d. Use the flow to equity method to calculate the value of thecompany’s equity after the recapitalization. (Do not roundintermediate calculations and enter your answer in dollars, notmillions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)