Hi,

Please help me to answer this question;

It is now June 20X8. Chromex Co manufactures bicycles for the UK and European markets, and has made a bid of $150 million to take over Bexell Co, their main UK competitor, which is also active in the German market. Chromex currently supplies 24% of the UK market and Bexell has a 10% share of the same market.

Chromex anticipates labour savings of $700,000 per year, created by more efficient production and distribution facilities, if the takeover is completed. In addition, the company intends to sell off surplus land and buildings with a balance sheet value of $15 million, acquired in the course of the takeover.

Total UK bicycle sales for 20X7 were $400 million. For the year ended 31 December 20X7, Bexell reported an operating profit of $10 million, compared with a figure of $55 million for Chromex. In calculating profits, Bexell included a depreciation charge of $0.5 million.

Note. The takeover is regarded by Chromex in the same way as any other investment, and is appraised accordingly.

Required

Extract relevant cash flows for investment decision.