You have been tasked with evaluating the acquisition of ABCAB, a smaller retail firm, by xYZAB, a large publicly traded corporation.

ABCAB reported $16$ million in after$-$tax operating income in the most recent year, with a book value of capital invested in the firm at the

beginning of that year standing at $200$ million. The cost of capital for XYZ AB is $12\%,$ whereas for ABCAB, its $9\%.$

ABCAB anticipates its after$-$tax operating income to grow at a rate of $2\%$ annually in perpetuity. xYZAB envisions that through the

acquisition, it can enhance the return on capital to $12\%$ on forthcoming investments and reduce ABC $\text{'}$s cost of capital to $8\%,$ while

maintaining the growth rate at $2\%.$

The task at hand is to estimate the gain xYZAB would achieve by acquiring ABCAB.