You are considering a takeover of PMT Corporation a firm that has significantly

You are considering a takeover of PMT Corporation a firm
that has significantly underperformed its peer group over the last five years
and you wish to estimate the value of control. The data on PMT Corporation the
peer group and the best managed firm in the group are given below.PMT Corporation reported earnings per share of $2.50 in the
most recent time period and is expected to reach stable growth in five years
after which the growth rate is expected to be 6% for all firms in this
group.The beta during the stable growth
period is expected to be 1 for all firms. There are 100 million shares
outstanding and the treasury bond rate is7% (the tax rate is 40% for all firms).a. Value the equity in PMT Corporation assuming that the
current management continues in place.b. Value the equity in PMT Corporation assuming that it
improves its performance to peer group levels.c. Value the equity in PMT Corporation assuming that it
improves its performance to the level of the best managed firm in the group.