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Suppose that Portsea Inc. is thinking about acquiring a firm in its industry for $ 1 5 0 million. The acquisition is expected to increase

Suppose that Portsea Inc. is thinking about acquiring a firm in its industry for $150 million. The acquisition is expected to increase Portsea's free cash flow by $20 million in the first year, and this contribution is expected to grow at a rate of 3% every year thereafter. Assume that Portsea currently maintains a debt-to-equity ratio of 0.80, its corporate tax rate is 30%, its cost of debt is 4%, and its cost of equity is 14%. Further assume that Portsea will maintain a constant debt-equity ratio for the acquisition. What is the free cash flow to equity (FCFE) for the acquisition in year 0?

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