value of Vandell’s operations

1. Distinguish between operating mergers and financial mergers.
2. Distinguish between the APV, FCFE, and corporate valuation models.
3. Vandell’s free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 5 percent a year; its beta is 1.4. What is the value of Vandell’s operations? If Vandell has $10.82 million in debt, what is the current value of Vandell’s stock? (Hint: Use the corporate valuation model of Chapter 11.)