On January 30, 2016, the company SILO lte decided to merge with the company ALG lte. This merger will result in an increase in the costs of the company SILO lte and a reduction in the costs of the company ALG lte representing 10% and 20% of their respective revenues. The financial statements recorded by the two companies during the last five accounting years, which you will take care to complete, are presented in appendices 1 and 2. The costs of goods sold (COGS) of the companies SILO lte and ALG lte represent 25% and 15 % of their respective turnover while their respective administrative costs represent 16% and 12% of these same turnover. The interest rates applicable to the two companies are 11% and 13% respectively. In addition, SILO Ltd.'s tax rate is 40% while ALG Ltd. is taxed at the rate of 28%. The dividend growth rate (g1) of the companies SILO lte and ALG are 5.89% and 15.26% respectively. On the other hand, the future cash flows realized by the two companies will start to grow indefinitely five years after the date of the merger knowing that their respective sustained growth rates (g2) will be, on that date, 2% and 3%. . The expected market return on the date of the merger is 9% and the return on the risk-free security is 3%. In addition, the Beta of the company SILO lte. is 5 and that of the company ALG lte. is 10.

Work to do : a- Determine the result of synergy; b- Determine the maximum value of the target as well as the bonus.