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An acquiring firm is analyzing the possible acquisition of a target firm. Both firms have no debt. The acquiring firm believes the acquisition of the
An acquiring firm is analyzing the possible acquisition of a target firm. Both firms have no debt. The acquiring firm believes the acquisition of the target firm will increase its total after-tax annual cash flows by $3.3 million per year forever. The appropriate discount rate for the incremental cash flows is 11 percent. The current market value of the target firm is $85 million, and the current market value of the acquiring firm is $150 million. If the acquiring firm pays $90 million in cash to the target firm's shareholders, what is the net present value of the acquisition? Enter your answer in the box shown below as millions of dollars with 2 digits to the right of the decimal point
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