Corporation is considering the acquisition

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N Corporation is considering the acquisition of A Corporation. A Corporation has earnings before interest and tax of $1.75 million, and asset replacement cost approximately equals depreciation. Efficiencies gained through the merger will reduce A’s operating costs by $320,000. Cash flows occur at year-end.

Assuming a 20 percent tax rate and a 10 percent required return, what is the value of A’s capital without a merger?

Assuming a 20 percent tax rate and a 10 percent required return, what is the value of A’s capital after a merger?

Reference no: EM131303914

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