Summers, Inc., is an unlevered firm with expected annual earnings before taxes of $25.7 million in...

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Summers, Inc., is an unlevered firm with expected annualearnings before taxes of $25.7 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 1.96 million shares of common stockoutstanding and is subject to a corporate tax rate of 23 percent.The firm is planning a recapitalization under which it will issue$35.9 million of perpetual 5.8 percent debt and use the proceeds tobuy back shares.
What is the price per share after the recapitalization andrepurchase? (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)
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.)

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Summers, Inc., is an unlevered firm with expected annualearnings before taxes of $25.7 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 1.96 million shares of common stockoutstanding and is subject to a corporate tax rate of 23 percent.The firm is planning a recapitalization under which it will issue$35.9 million of perpetual 5.8 percent debt and use the proceeds tobuy back shares.What is the price per share after the recapitalization andrepurchase? (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)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.)