Estimate the DCF value of the gains from the merger accruing to the shareholders of Chase and Chemical assuming that all the anticipated benefits and costs (in Ex 8) are realized. Assumptions: Discount rate = 15% (based on: 30 year T-bond rate = rf = 6.35%, equity beta = 1.2 and market risk premium = 7.4%). Incremental cash flows to shareholders (from case description and Ex 8): Restructuring cost of $ 1.9B realized at the end of 1995 (t = 0) b. Cost savings: $600M in 1996, $ 1050M in 1997 and $ 1, 700 in 1998 c. Revenues: decrease of $125M in 1996, $20.0M in 1997 and $120M in 1998 d. Assume that the steady-state growth perpetuity (TV) accrues in 1999. Both savings and revenues grow at a terminal growth rate g = 5% e. Tax rate = 34% TV_99 = CF_98 (1 + g)/k-g PV (TV_99): discount back 4 years at k = 15%. Gain from merger = PV(Cf_t) + PV(TV_99)