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Firm A is interested in acquiring Firm B. According to Firm A's CEO, the merger is expected to result in pre-tax cost savings of $400
Firm A is interested in acquiring Firm B. According to Firm A's CEO, the merger is expected to result in pre-tax cost savings of $400 million by the end of the first year, and then grow at 2% per year thereafter. If the corporate tax rate is 25% and the appropriate discount rate is 10%, what (roughly) is the present value of the expected synergy benefits (from cost savings)? $2,800 million $3,500 million $3,000 million $2,000 million $2,500 million
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