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Suppose that Rose Industries is considering the acquisition of another firm in its industry. The acquisition is expected to increase Rose's free cash flow by

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Suppose that Rose Industries is considering the acquisition of another firm in its industry. The acquisition is expected to increase Rose's free cash flow by $5.5 million the first year, and this contribution is expected to grow at a rate of 3% every year thereafter. Rose currently maintains a debt to equity ratio of 1, its corporate tax rate is 21%, its cost of debt is 6%, and its cost of equity is 10%. Rose Industries will maintain a constant debt-equity ratio for the acquisition. Given that Rose issues new debt of $55 million initially to fund the acquisition, the total value of this acquisition using the APV method is closest to: Select one: o a. $142 million. o b. $96 million. O c. $110 million. O d. $124 million

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