Question 10 10 pts A chocolate company (ticker: CHOC) announces a surprise acquisition of a peanut butter company (PB). By securing a steady supply of peanut butter, CHOC hopes to produce chocolate peanut butter cups more cheaply. Joining forces will result in $5.0 million additional free cash flow, starting in one year, above what the firms would generate separately. This incremental benefit will grow by 3% every year thereafter. Both CHOC and PB have WACC of 11%. Prior to the announcement, CHOC's stock price was $125 and it had 67 million shares. PB's stock price was $41 with 17 million shares. When the takeover is announced, what is your best guess for the dollar change in a) CHOC's stock price? b) PB's stock price? Upload Choose a File Question 11 5 pts A mining company is considering spending $50,000 today for a new drill that will last 5 years and be worthless after. This drill runs more efficiently than the old one and will result in an incremental $10,000 in free cash flow each year, starting in one year, for five years. Given the information in this question, what, if anything, can you say about the NPV of this project? Edit View Insert Format Tools Table 12pt Paragraph ~ | B. I A & Tev : Question 10 10 pts A chocolate company (ticker: CHOC) announces a surprise acquisition of a peanut butter company (PB). By securing a steady supply of peanut butter, CHOC hopes to produce chocolate peanut butter cups more cheaply. Joining forces will result in $5.0 million additional free cash flow, starting in one year, above what the firms would generate separately. This incremental benefit will grow by 3% every year thereafter. Both CHOC and PB have WACC of 11%. Prior to the announcement, CHOC's stock price was $125 and it had 67 million shares. PB's stock price was $41 with 17 million shares. When the takeover is announced, what is your best guess for the dollar change in a) CHOC's stock price? b) PB's stock price? Upload Choose a File Question 11 5 pts A mining company is considering spending $50,000 today for a new drill that will last 5 years and be worthless after. This drill runs more efficiently than the old one and will result in an incremental $10,000 in free cash flow each year, starting in one year, for five years. Given the information in this question, what, if anything, can you say about the NPV of this project? Edit View Insert Format Tools Table 12pt Paragraph ~ | B. I A & Tev