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Calculating NPV Plant, Inc., is considering making an offer to purchase Palmer Corp. Plant's vice president of finance has collected the following information: Plant also

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Calculating NPV Plant, Inc., is considering making an offer to purchase Palmer Corp. Plant's vice president of finance has collected the following information: Plant also knows that securities analysts expect the earnings and dividends of Palmer to grow at a constant rate of 4 percent each year. Plant management believes that the acquisition of Palmer will provide the firm with some economies of scale that will increase this growth rate to 6 percent per year. What is the value of Palmer to Plant? What would Plant's gain be from this acquisition? If Plant were to offer $20 in cash for each share of Palmer, what would the NPV - of the acquisition be? What is the most Plant should be willing to pay in cash per share for the stock of Palmer? If Plant were to offer 225,000 of its shares in exchange for the outstanding stock of Palmer, what would the NPV be? Should the acquisition be attempted? If so, should it be as in (c) or as in (e)? Plant's outside financial consultants think that the 6 percent growth rate is too optimistic and a 5 percent rate is more realistic. How does this change your previous answers

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