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Firm A is analyzing the possible acquisition of Firm T. Firm A believes the acquisition will increase its total after-tax annual cash flows by $127,250
Firm A is analyzing the possible acquisition of Firm T. Firm A believes the acquisition will increase its total after-tax annual cash flows by $127,250 indefinitely. The current market value of Firm T is $6,373,250 whereas that of Firm A is $10,461,750. The appropriate discount rate for evaluating the incremental cash flows is 11.22%. If Firm A offers 35.70% of its stock to Firm T's shareholders, what will be the NPV of this acquisition to Firm A?
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