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How much potential value, if any, can AHP create at each of the proposed levels...

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Finance

How much potential value, if any, can AHP create at each of the proposed levels of debt shown in Exhibit 3?

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Pro Forma 1981 for Actual 30% Debt to 50% Debt to 1981 Total Capita Total Capita 70% Debt to Capital Sales $4,131.2 $4,131.2 $4,131.2 $4,131.2 Earnings before interest and taxesa Interest Profit before taxes Taxes Profit after tax Dividends on 954.8 2.3 952.5 455.2 497.3 922.2 52.7 869.5 417.4 452.1 922.2 87.8 834.4 400.5 433.9 922.2 122.9 799.3 383.7 415.6 preferred stock Earnings available 4 496.9 4 451.7 4 433.5 4 415.2 to common shareholders Dividends on common stock Average common $295.3 $271.0 $260.1 $249.1 127.3 118.9 shares outstanding (millions) Earnings per share Dividends per share 155.5 135.7 $3.18 $1.90 $3.33 $2.00 $3.41 $2.04 $3.49 $2.10 Beginning of Year Beginning of Year after Recapitalization $360.3 376.1 $877.6 $360.3 626.8 $626.9 $360.3 877.6 $376.1 $593.3 Cash and equivalents Total debt Net worth Common stock price Aggregate market 13.9 $1,472.8 S30 value of common stock $4,665.0 a EBIT is reduced in pro forma results due to the loss of interest income from the $233 million in excess cash used to repurchase stock

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