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Fly - By - Night Couriers is analyzing the possible acquisition of Flash - in - the - Pan Restaurants. Neither firm has debt. The
FlyByNight Couriers is analyzing the possible acquisition of FlashinthePan Restaurants. Neither firm has debt. The forecasts of FlyByNight show that the purchase would increase its annual aftertax cash flow by $ indefinitely. The current market value of FlashinthePan is $ million. The current market value of FlyByNight is $ million. The appropriate discount rate for the incremental cash flows is percent. FlyByNight is trying to decide whether it would offer percent of its stock or $ million in cash to FlashinthePan.
a
What is the synergy from the merger? Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, eg
b What is the value of FlashinthePan to FlyByNight? Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, eg
c What is the cost to FlyByNight of each alternative? Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, eg
d What is the NPV to FlyByNight of each alternative? Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, eg
e What alternative should FlyByNight use?
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