Melan plc and Faro plc generate constant annual cash flows of 52 billion and 500 million, respectively. The appropriate discount rate for these cash flows is 20%. Melan plc intends to acquire the entire share capital of Faro plc and it estimates that the value of the synergistic benefit from the acquisition is 500 million.

1. What is the current market value of the target firm?
2. What is the maximum price the bidder should pay for the target firm?