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They forecast new revenue of 100 million in the first year and $200 million in year , growing at 2.5% per year thereafter. The cost
They forecast new revenue of 100 million in the first year and $200 million in year , growing at 2.5% per year thereafter. The cost of good underlyiing these new revenues is 45 percent of the revenues. To achieve these synergies will require an investment of 40 million initially, and 5% of the added revenue each year, to fund working capital growth.
Find the net present value of these synergies using discount rate 15% and marginal tax rate of 40%%.
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