NOTE-PLZ ANSWER EACH PART OF THIS QUESTION BRIEFLY AND IN GREAT DETAIL (approx3-4 pages). IF YOUR ANSWER WILL BE ACCORDINGLY I WILL SURELY GIVE AN UPVOTE. PLZ SOLVE ASAP

4. XYZ Ltd announced its plan to acquire PQR Ltd. At the time of the acquisition, the relevant information about the two companies was as follows: XYZ Ltd POR Ltd Revenues Rs. 12,400 Rs. 10,200 Cost of goods sold (without depreciation) 50% 70% Depreciation Rs. 600 Rs.500 Tax rate 35% 35% Capital spending Rs. 1050 Rs. 800 Working capital (as % of revenue) 20% 20% Beta 1.45 1.25 Expected growth rate in revenues/EBIT 20% 10% Expected period of high growth Growth rate after high growth period 6% 6% Beta after high growth period 1.0 5 years 5 years 1.0 Capital spending will be 120% of depreciation after the high-growth period. Neither firm has any debt outstanding. The Treasury bond rate is 6%. Risk Premium 5.5% a. Estimate the value of XYZ Ltd and PQR Co, operating independently. b. Estimate the value of the combined firm, with no synergy. c. As a result of the merger, the combined firm is expected to grow 18% a year for the high growth period. Estimate the value of the combined firm with the higher growth. d. What is the synergy worth? What is the maximum price XYZ Ltd can pay for PQR Co.? 4. XYZ Ltd announced its plan to acquire PQR Ltd. At the time of the acquisition, the relevant information about the two companies was as follows: XYZ Ltd POR Ltd Revenues Rs. 12,400 Rs. 10,200 Cost of goods sold (without depreciation) 50% 70% Depreciation Rs. 600 Rs.500 Tax rate 35% 35% Capital spending Rs. 1050 Rs. 800 Working capital (as % of revenue) 20% 20% Beta 1.45 1.25 Expected growth rate in revenues/EBIT 20% 10% Expected period of high growth Growth rate after high growth period 6% 6% Beta after high growth period 1.0 5 years 5 years 1.0 Capital spending will be 120% of depreciation after the high-growth period. Neither firm has any debt outstanding. The Treasury bond rate is 6%. Risk Premium 5.5% a. Estimate the value of XYZ Ltd and PQR Co, operating independently. b. Estimate the value of the combined firm, with no synergy. c. As a result of the merger, the combined firm is expected to grow 18% a year for the high growth period. Estimate the value of the combined firm with the higher growth. d. What is the synergy worth? What is the maximum price XYZ Ltd can pay for PQR Co