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Suppose that Flower Industries is considering the acquisition of another form in its industry for $120 million. The acquisition is expected to increase Flower's free

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Suppose that Flower Industries is considering the acquisition of another form in its industry for $120 million. The acquisition is expected to increase Flower's free cash flow by $6 million in the first year, and this contribution is expected to grow at a rate of 4% every year thereafter. Flower currently maintains a debt-to-equity ratio of 1. The firm's corporate tax rate is 25%, its cost of debt is 7%, and its cost of equity is 9%. Flower Industries will maintain a constant debt-to-equity ratio for the acquisition. The Free Cash Flow-to-Equity (FCFE) for the acquisition in year 1 is closest to: $4.12 million $4.71 million $5.25 million $7.45 million None of the above

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