You are leading a team on a M&A deal. Suddenly your analyst has disappeared and you have the following unfinished spreadsheet. The acquirer and the target are assumed to have zero growth. Now it is up to you to finish this job. You also believe that the tax rate will be 20% when this merger closes, so you are using 20% as the corporate tax rate in this calculation. Acquirer Target Combined Sales 500 120 620 Operating Expenses 200 60 260 Annual cost savings 20 EBIT 300 60 ?1? EBIT(1 - t) 240 48 ??? Depreciation 40 20 ??? 30 40 ??? Gross Plant & Equipment Change in Working 10 222 Acquirer Target Combined Sales 500 120 620 200 60 260 Operating Expenses Annual cost savings 20 EBIT 300 60 ?1? EBIT(1 -t) 240 48 ??? 40 20 ??? 30 40 ??? Depreciation Gross Plant & Equipment Change in Working Capital 10 5 ??? Free Cash Flow to Firm 240 23 ?2? Discount rate 8.00% 9% 8% Firm Value 3000 255.56 ??? Long term debt 1000 100 1100 Equity value 2000 155.56 ?3? ?1? is ?2? is ?3? is The synergy of this merger is