5. Miller Manufacturing and Modigliani Clothing are discussing a merger that is expected to reduce annual costs. Particularly, the NewCo should be able to realise a cost saving in each year equal to 2% of Modigliani' revenue. Modigliani's revenue in year 1 is forecast to be $350m, growing at 2% p.a. in perpetuity. The tax rate is 30% and the cost of debt is 7%. To realise the cost saving, the NewCo will need to spend $15m in staff termination payments, incurred in year 0. What is the value of the cost synergy, assuming it is as risky as EBIT? a. $101.4 million b. $96.9 million c. $87.5 million d. $83.0 million e. None of the above