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Background: You are a consultant advising the CEO of a medium-sized energy company located in the United States (so it mostly transacts in US dollars).

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Background: You are a consultant advising the CEO of a medium-sized energy company located in the United States (so it mostly transacts in US dollars). The company's activities include drilling for oil and selling crude oil to refineries. The firm's CEO is wondering if she should diversify her company by acquiring a minority ownership stake in a company that manages oil pipelines (which transport oil once it is extracted). The oil pipeline operator that the CEO is considering investing in generates cash flows of $20 million a year. The firm's cash flows are relatively safe, and the firm's cost of capital is of 8%. The firm's cash flows are expected to remain steady, neither growing nor shrinking, over time. If your client's firm acquired a 10% ownership stake in the pipeline operator, what would be the value of the combined firm

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