Alfa Inc company is targeted for merger. In the present, the revenues of the company are

$$10$ mil and it is forecast that in the next years it will increase by $10\%$ each year. The operating

expenses are $$8$ mil, which are expected to grow with the same growth rate as the revenues.

Depreciation is $$500,000$ and is estimated to increase by $$50,000/$year$.$ The investment needs

$($CAPEX$)$ are $$200,000$ each year, and the short term financing needs $($NWC$)$ are estimated at $2\%$

of turnover. The company has $$1$ mil in net debts, at an interest rate of $4\mathrm{.}5\%.$ The risk$-$free rate for

government bonds is $4\mathrm{.}5\%,$ the market risk premium is $6\%$ and beta coefficient is $1\mathrm{.}5.$ The D$/$E

ratio is $0\mathrm{.}5$After the merger, the D$/$E ratio will be $0\mathrm{.}35$ taking into account the repayment of loans forecasted

by the acquirer. Net debt $=700,000$ after the deal

b$)$ Will the company record a financial synergy. Compute the value of the synergy.

c$)$ $$10$ mil will be a good price for the deal?