Q8 to Q16 are based on the following information:

You are leading a team on a M&A deal. Suddenly your analyst has disappeared and you have the following unfinished spreadsheet. The acquirer and the target are assumed to have zero growth. Tax rate is 40%. Now it is up to you to finish this job.

	Acquirer	Target	Combined
Sales	400	100	500
Operating Expenses	200	60	260
Annual cost savings			20
EBIT	200	40	?1?
EBIT(1 t)	120	24	???
Depreciation	40	30	???
Gross Plant & Equipment	30	30	???
Change in Working Capital	10	5	???
Free Cash Flow to Firm	120	19	?2?
Discount rate	8.00%	9%	8%
Firm Value	1500	211.111	?3?
Long term debt	400	50	450
Equity value	1100	161.111	?4?

8. Please fill in the numbers. What is ?1?

9. What is ?2?

10. What is ?3?

11. What is ?4?

12. What is the synergy of this merger?

13. What is minimum price to offer?

14. Suppose you decide to share 30% of the synergy to the target shareholders, what is your initial offer?

15. What is the maximum price you can offer?

16. If the tax rate drops from 40% to 22% and everyting else stays the same, the synergy from this merger will increase.