What is the total synergy gain from this merger

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Reference no: EM132049701

1. Fly-by-night couriers is analyzing the possible aquistion of flash-in-the-pan restaurants. Neither has any debt. The forecasts by Fly-by-Night show that the purchase would increease total annual after tax cash flows by $600,000 indefinetely. The current market value of Flash-in-the-pan is $10 Million. The current market value of Fly-by-night is $35 Million. The appropriate discount rate for any change in cash flows form the merger is 8 percent.

What is the total synergy gain from this merger?

A) 7,500,000

B) 8,500,000

C) 6,500,000

D) 9,500,000

E) None of the above

2. Fly-by-night couriers is analyzing the possible aquistion of flash-in-the-pan restaurants. Neither has any debt. The forecasts by Fly-by-Night show that the purchase would increease total annual after tax cash flows by $600,000 indefinetely. The current market value of Flash-in-the-pan is $10 Million. The current market value of Fly-by-night is $35 Million. The appropriate discount rate for any change in cash flows form the merger is 8 percent.

What is the most that Fly-by-night would be willing to pay for flash in the pan?

A) 10,000,000

B) 17,500,000

C) 16,500,000

D) 19,500,000

E) None of the above

3. Fly-by-night couriers is analyzing the possible acquisition of flash-in-the-pan restaurants. Neither has any debt. The forecasts by Fly-by-Night show that the purchase would increase total annual after tax cash flows by $600,000 indefinitely. The current market value of Flash-in-the-pan is $10 Million. The current market value of Fly-by-night is $35 Million. The appropriate discount rate for any change in cash flows form the merger is 8 percent.

The Overall evidence on IPOs is that they tend to be _____

A) Overpriced

B) Priced Fairly

C) Underpriced

D) None of the above

Reference no: EM132049701

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