ANSWER QUESTIONS 27 TO 28 USING THE FOLLOWING INFORMATION Firm A's value is $50 million and Firm B's value is $30 million. If Firm A purchases Firm B and merges with Firm B, then the synergy created by the merger results in a perpetual increase in cash flow of $1 million per year. The capitalization rate (cost of equity) is 10 percent annually What is the value of the synergy? Similion $10 million 5100.000 od none of the above ANSWER QUESTIONS 27 TO 28 USING THE FOLLOWING INFORMATION Firm A's value is $50 million and Firm B's value is $30 million. If Firm A purchases Firm B and merges with Firm B, then the synergy created by the merger results in a perpetual increase in cash flow of $1 million per year. The capitalization rate (cost of equity) is 10 percent annually Firm A specifically purchases Firm B by giving Firm B 40 percent of its value, le giving Firm B 40 percent of Firm A's stock. What is the net present value to Firm A of its purchase of Firm B? $30 million b. 540 million 514 million 54 million