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Universal Drapers Inc. is considering an acquisition of Thatherton Fuels., and estimates that acquiring Thatherton will result in incremental after-tax net cash flows in years
Universal Drapers Inc. is considering an acquisition of Thatherton Fuels., and estimates that acquiring Thatherton will result in incremental after-tax net cash flows in years 13 of $7 million, $10.5 million, and $12.6 million, respectively. After the first three years, the incremental cash flows contributed by the Thatherton acquisition are expected to grow at a constant rate of 5% per year. Universals current beta is 1.60, but its post-merger beta is expected to be 2.08. The risk-free rate is 6%,
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