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Firm A is analyzing the possible acquisition of Firm B. Neither firm has debt. The forecasts of Firm A show that the synergetic benefits of
Firm A is analyzing the possible acquisition of Firm B. Neither firm has debt. The forecasts of Firm A show that the synergetic benefits of acquiring Firm B is $325,000. The current market value of Firm B is $9,300,000. The current market value of Firm A is $24,950,000. The appropriate discount rate for the incremental cash flows is 8%. Firm A is trying to decide whether it should offer 36% of its stock or $15,000,000 in cash for Firm
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