The pharmaceutical company SNAP Inc. is currently evaluating the possibility of acquiring December 2017 the company MEDICALS inc. which belongs to the same industrial sector. THE SNAP financial analysts predict that if the acquisition takes place, it will produce the cash flows following net monetary values:

Year	net Monetary flux($M)
2019	1.20
2020	1.40
2021	1.65
2022	1.80

After 2021, analysts predict that these flows will continue to increase at a constant rate of 5%. Furthermore, we inform you that the company MEDICALS, which is listed on the stock exchange, owns Currently a beta risk coefficient of 1.4 is a debt-to-equity ratio of 25%. Having not been very profitable in recent years, its tax rate is 20%. If the acquisition is completed, SNAP managers plan, in a program of restructuring of MEDICALS, to increase its debt to equity ratio to 40%. The rate tax rate of MEDICALS will increase to 50% due to the increase in its profitability. 1- Knowing that treasury bonds offer a return of 5% per year and that the rate of stock market return is 12%, what is the maximum price that the SNAP company would you be willing to pay to acquire MEDICALS?

2. We now provide you with the following extracts from the balance sheets and income statements of the two companies as of 12/31/2017 (without taking into account the acquisition):

Extract from the Balance Sheet 12/31/2017 ($M)	SNAPS	MEDICAL
Currents Assets	4	4
Fixed Assets	17	6
Total Assets	21	10
Debts	6	2
Equity	15	8
Total Capital	21	10

Excerpt from The State of Results as of 12/31/2017 ($M) SNAPS MEDICAL Sales 12.65 3.9 Cost of operations 4.2 2.15 Amortization of the 0.8 0.45 Fixed assets Profit before interest and 7.65 1.3 Taxes Interests 0.6 0.3 Pre-tax profit 7.05 1 3.525 0.2 Tax 3.525 0.8 Profit after Interest and Taxes