8. Copper Pipes Incorporated (CPI) is planning to acquire Base Copper Mines (BCM). Currently, BCM has 4000 shares trading at $65 per share. CPI estimates the transaction costs of the acquisition are $10,000 and the required return on BCMs assets is 12%. Acquiring BCM will generate over the next 20 years incremental cash flows as follows:

Source	Amount of Change	Source	Amount of Change
Revenues	Increase $21,500	Taxes	Decrease $4000
Costs	Increase $12,000	Capital requirements	Increase $2500

A. What are the incremental cash flows to CPI? (4 marks)

B. What is the maximum price CPI can pay for BCM? (7 marks)

C. CPI has 4800 shares outstanding at $85 per share market price. CPI offers BCM shareholders $75 per share in cash. If the offer is accepted, what would be the new price per share of CPI after the purchase? (5 marks)