Global Sotelite Corp. (GSC) is a publicly traded company, and its market-determined pre-merger beta is 1.00. You also have the following information about the company and the projected statements: - GSC currently has a $38.00 million market value of equity and $24.70 million in debt. - The risk-free rate is 3.5%, there is a 5.60% market risk premium, and the Capitel Asset Pricing Model produces a pre-merger required rate of retum on equity rsL of 9.10%. - GSC's cost of debt is 5.50% at a tax rate of 30%. - The projections assume that the company wits have a post-horizon growth rate of 5.50%. - Current total net operating capital is 5104,0 , and the sum of existing debt and debt required to meintain a constant capital structure at the time of acquisition is $32 milion. - The firm does not have any nonoperating assets such as morketable securities. Suppose. Widget Corp. plans to use more debt in the first few years of the acquistion of Giobol Satellete Corp. (GSC) Assuming that using more debt Will not lesd to an increese in bankruptcy costs for Widget Corp., the interest tax shields and the value of the tax shield in the analysis, will leading to a value of operatians of the acquired firm. The ApV approach is congldered useful for valuing acquisition targets, becouse the method involves anding the values of the unievered firm and the interest tox shield separately and then summing those values. Why is it diffcult to value-certain types of acquisitions using the corporate valuetion model? The acquiring firm usualty assumes the debt of the target firm. Thus, old debt with dilferent coupon rates usually becomes a port of the Bcquirtion deal The acquiring fim immediately retires the target firin's old debt. Thus, the acquisition deat consists of only new debt in its capital Afructure