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Business, 03.11.2020 16:50 jonmorton159

Fly By-Night plans to acquire Flash in-the-Pan Restaurants. Neither firm has debt. The forecasts of Fly By-Night show that the purchases would increase its annual after-tax cash flow by $350,000 indefinitely (i. e., in perpetuity). The current market value of Flash-in-the-Pan is $9 million. The current market value of Fly-By-Night is $23 million. The appropriate discount rate for the incremental cash flows is 8 percent. Fly-By-Night is trying to decide whether it should offer 35 percent of its stock or $12 million in cash to Flash-in-the-Pan. a.What is the synergy from the merger

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Fly By-Night plans to acquire Flash in-the-Pan Restaurants. Neither firm has debt. The forecasts of...
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