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Mega Pharma, Inc. (MPI) is considering merging with a smaller, independent company, SuperDrug, Ltd. (SDL). Using the appropriate discount rate of 12%, the analysts at
Mega Pharma, Inc. (MPI) is considering merging with a smaller, independent company, SuperDrug, Ltd. (SDL). Using the appropriate discount rate of 12%, the analysts at MPI have determined that the present value of the total incremental cash flows resulting from the possible merger would be $335.665 million. SDLs current market price is $50.25, and the firm has 5.5 million shares outstanding. What is the maximum price per share that MPI should offer to purchase SDL?
a. | $61.03 | |
b. | $57.78 | |
c. | $55.25 | |
d. | $55.94 | |
e. | $6.08 |
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