The Value of Firm (D) = $80.00. The Value of Firm E is determined by yearly cash

flow as follows; Year 1 = $40.00, Year 2 = $30.00, Year 3 = - $15.00 (negative), and in

Year 10 = $5.00 to Perpetuity. The Cost of Capital for Firm 2 is; RF = 1.5%, Beta is

1.35 and the Toronto Stock Exchange at the beginning of the year was 16,000 and

will close at 18,500. Total Synergy created will be $12.00. Find the Value of the Firm

(D/E) if Firm D will pay $55.00 in Cash and $15.00 in Equity for Firm E.

$97.0474

$110.0474

$86.7699

$127.0474