Handout Problem 4 Prius Enterprises, a publicly traded company, is considering acquiring Juniper Inc, a private company in the same business. Assume that both Prius and Juniper are stable growth companies funded entirely with equity, each with expected free cash flows next year of $ 10 million, and each expected to grow 4% a year in perpetuity. The unlevered beta for the sector is 0.80 but only 40% of the risk in the business is market risk. The riskfree rate is 5% and the equity risk premium is 4%. (Tax rate = 40% for both firms) a. Prius Enterprises has 5 million shares outstanding. Estimate the value per share for Prius as a stand-alone firm. b. Estimate the value of Juniper as a stand-alone firm to its existing owner (who is not diversified). c. Assume that Prius pays a premium of 50% over the estimated value of Juniper (from part b). Estimate the synergy after the transaction.