Fly-by-night couriers is analyzing the possible acquisition of flash-in-the-pan restaurants. Neither has any debt. The forecasts by Fly-by-Night show that the purchase would increase total annual after tax cash flows by $600,000 indefinitely. The current market value of Flash-in-the-pan is $10 Million. The current market value of Fly-by-night is $35 Million. The appropriate discount rate for any change in cash flows form the merger is 8 percent.

We argued that makiing an issue easier to sell was a legitimate reason to underpice an issue.

A) True

B) False

C) not enough info