Happy Times, Inc., wants to expand its party stores into the Southeast. In order to establish an immediate presence in the area, the company is considering the purchase of the privately held Joe's Party Supply. Happy Times currently has debt outstanding with a market value of $140 million and a YTM of 6 percent. The company's market capitalization is $380 million, and the required return on equity is 12 percent. Joe's currently has debt outstanding with a market value of $30.5 million. The EBIT for Joe's next year is projected to be $12.5 million. EBIT is expected to grow at 10 percent per year for the next five years before growth slows to 3 percent in perpetuity. Net working capital, capital spending, and depreciation as a percentage of EBIT are expected to be 9 percent, 15 percent, and 8 percent, respectively. Joe's has 1.85 million shares outstanding and the tax rate for both companies is 38 percent. You may assume that the WACC of the two companies is the same. a. Based on these estimates, what is the maximum share price that Happy Times should be willing to pay for Joe's? Use the WACC Method. b. Calculate the Enterprise Value/EBITDA multiple based on your estimate of the value of the firm. If the current market benchmark for recent acquisition transactions for party stores is 6, is your maximum share price reasonable?