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d) i. Firm A has a value of 150 million and Firm B has a value of 100 million. Merging the two would create operating
d) i. Firm A has a value of 150 million and Firm B has a value of 100 million. Merging the two would create operating synergies with a present value of 40 million. What is the gain from this merger if Firm A purchases Firm B for 120 million? State any formulae used, and show your workings. (3 marks) d) ii. Explain, in the context of a horizontal merger, what 'synergies' are and how they can come about. [Typed answer preferred.] (6 marks)
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