You are leading a team on a MBA 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 Target Combined Acquirer 500 120 620 200 60 260 Sales Operating Expenses Annual cost savings EBIT 40 300 60 717 240 48 222 40 20 727 40 30 777 EBIT(1-1) Depreciation Gross Plant & Equipment Change in Working Capital Free Cash Flow to Firm 1 10 5 23 227 240 9 84 8.000 3000 Discount rate Firm value m 25556 100 1100 1000 Long term debt Alimentos EBIT 300 60 717 EBIT(1-1) 240 48 722 Depreciation 40 20 72 30 40 m Gross Plant & Equipment Change in Working Capital Free Cash Flow to Firm 10 5 722 240 23 727 Discount rate 8.00% 996 8% Firm Value 3000 255.56 272 Long term debt 1000 100 1100 Equity value 2000 155.56 ?3? 712 is 72? is 737 is The synergy of this merger is