1. You are presented with the following estimates of the cost synergies of a merger:

Year		0	1	2	3	4	5
Pre-Tax Cost Savings, Constant US$			$ 50	$ 100	$100	$100	$ 100
Expected Inflation Rate			2%	2%	2%	2%	2%
Growth Rate FCFF (nominal), perpetuity	2%
Discount Rate	6%
Ongoing Investment/Savings (year 3+)	5%
Pre-Tax Cost Savings, Current US$			$ 51	$ 104	$106	$108	$ 110
Tax Expense (@ .40)			(20)	(42)	(42)	(43)	(44)
After-Tax Cost Savings			31	62	64	65	66
Less: Investment to Realize Savings		$ (1,000)			(5)	(5)	(6)
Plus: Disinvestment Associated with the Savings			20	20	10	-	-
Subtotal		(1,000)	51	82	68	60	61
Continuation Value							1,548
FCF		$ (1,000)	$ 51	$ 82	$ 68	$ 60	$ 1,609
NPV Cost Savings		$428
IRR Synergy Investment		15%

Now, assume that CFO is performing sensitivity analysis and alters the assumed perpetual growth rate to -10%, and the assumed discount rate to 10%. What will be the NPV of the cost savings? What will be the IRR?