Question 18 (30 points) Saved In November 2019, Alphabet (Google) announced that it had entered into an agreement to acquire Fitbit Inc (FIT) for $7.35 per share or roughly $2,100 million. Fitbit has sold more than 100 million devices, supporting over 29 million active users globally. Growth in wearabes is anticipated to be 6.0% per annum through 2025. In 2019, despite revenues exceeding $1.4 billion, Fitbit generated negative cash flows. With Alphabet's resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster, and improve efficiencies. Alphabet therefore expects cash flows to be a modest $35 million in the following year (i.e. CF]). Google's cost of capital is 8.0%. 1. Based on the data provided above, what is the present value of the acquisition? Do you agree with Google's decision to acquire Fitbit? Why? (show calculations; 10 points) Question 18 (30 points) Saved In November 2019, Alphabet (Google) announced that it had entered into an agreement to acquire Fitbit Inc (FIT) for $7.35 per share or roughly $2,100 million. Fitbit has sold more than 100 million devices, supporting over 29 million active users globally. Growth in wearabes is anticipated to be 6.0% per annum through 2025. In 2019, despite revenues exceeding $1.4 billion, Fitbit generated negative cash flows. With Alphabet's resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster, and improve efficiencies. Alphabet therefore expects cash flows to be a modest $35 million in the following year (i.e. CF]). Google's cost of capital is 8.0%. 1. Based on the data provided above, what is the present value of the acquisition? Do you agree with Google's decision to acquire Fitbit? Why? (show calculations; 10 points)