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Hastings Corporation is interested in acquiring VandellCorporation. Vandell currently has 1 million shares outstanding anda target capital structure consisting of 30% debt; its current betais 1.10 (i.e., based on its target capital structure). Vandell'sdebt interest rate is 8%. Assume that the risk-free rate ofinterest is 7% and the market risk premium is 6%. Both Vandell andHastings face a 30% tax rate. Hastings Corporation estimates thatif it acquires Vandell Corporation, synergies will cause Vandell’sfree cash flows to be $2.3 million, $2.9 million, $3.4 million, and$3.56 million at Years 1 through 4, respectively, after which thefree cash flows will grow at a constant 6% rate. Hastings plans toassume Vandell’s $9.12 million in debt (which has an 8% interestrate) and raise additional debt financing at the time of theacquisition. Hastings estimates that interest payments will be $1.6million each year for Years 1, 2, and 3. After Year 3, a targetcapital structure of 30% debt will be maintained. Interest at Year4 will be $1.441 million, after which the interest and the taxshield will grow at 6%.a. What is Vandell’s pre-acquisition levered cost of equity?What is its unlevered cost of equity? Round your answer to twodecimal places. Do not round intermediate calculations.Pre-acquisition levered cost of equity= ____%Unlevered cost of equity = _____%b. What is the intrinsic unlevered value of operations at t = 0(assuming the synergies are realized)? Round your answer to thenearest cent. Do not round intermediate calculations.c. What is the value of the tax shields at t = 0? Round youranswer to two decimal places. Do not round intermediatecalculations.d. What is the total intrinsic value of operations at t = 0?What is the intrinsic value of Vandell’s equity to Hastings? Whatis Vandell’s intrinsic stock price per share? Round your answer totwo decimal places. Do not round intermediate calculations.Value of operations: $millionEquity value to acquirer: $millionIntrinsic value per share of existing shares to acquirer: $/share