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ABC Corp acquires a firm for $9.7bn using a cost of capital of 11%. The CFO is certain the acquisition will have conventional cash flows

ABC Corp acquires a firm for $9.7bn using a cost of capital of 11%. The CFO is certain the acquisition will have conventional cash flows and a payback period of 5.0 years (ignoring time value of money). But she is uncertain whether the acquisition will potentially turn out really bad for the firm. She wants your advice can you estimate an upper limit on how much value can be destroyed by this acquisition?

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