Cash Flow Estimation (8 points) 10. Starbucks pays a consultant $125,000 to assess whether a specialty Bakery Company is a good company to buy. The Bakery Company is worth $185 million. Starbucks would relocate the Bakery Company to a parcel of land that it's currently leasing for $85,000 a vear. Starbucks estimates that the pastries it sells through this new acquisition would increase coffee sales by $5 million per year, but it would lose $1.8 million per year in merchandise sales due to space limitations. The specialty Bakery Company is expected to generate cash inflows of $12.5 in perpetuity. If Starbucks has a WACC or discount rate of 8.75%, should it buy the bakery