1. Two auto parts manufacturers have agreed to merge. By streamlining ope merger is projected to generate pretax cost savings of $63 million in the f million in the second year, $183 million in the third year, and thereafter g rate of inflation. To achieve these cost savings an investment of $480 mil made at the outset. Sales of redundant equipment and property are expect pretax gains of $63 million in the first year and $48 million in the second high probability that these projections will materialize. The merged comp capital is forecast at 9.6 percent; borrowing cost is expected to be 7.8 per 2.5 percent. What is the present value of savings? (Assume a marginal tax rate of 35 percent