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Firm Valuation Schultz Industries isconsidering the purchase of Arras Manufacturing. Arras is currentlya supplier for Schultz and the acquisition would allow Schultz tobetter control its material supply. The current cash flow fromassets for Arras is $7.1 million. The cash flows are expected togrow at 10 percent for the next five years before leveling off to 4percent for the indefinite future. The costs of capital for Schultzand Arras are 11 percent and 9 percent, respectively. Arrascurrently has 2.5 million shares of stock outstanding and $22million in debt outstanding. What is the maximum price per shareSchultz should pay for Arras?
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