3. What is the value of CP's revised offer on December 8, 2015 (before CP "sweetened" its offer by adding the CVR security)? In your analysis, assume the following:

(a) A valuation date of December 31, 2015, and year-end cash flows;

(b) The stand-alone (pre-merger) value of CP and NS are $134 and $80 per share, respectively;

(c) NS shareholders approve the merger and the Surface Transportation Board (STB) approves it;

(d) Investors expect 100% of projected merger benefits to be realized. What is the value if investors expect none of the projected merger benefits to be realized?

(e) NS must debt finance 100% of the cash portion of the revised offer ($32.86 per share).