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Yummy Burgers is analyzing the possible acquisition of Apple Pizzas. Neither firm has debt. The forecasts of Fly-By-Night show that the purchase would increase its

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Yummy Burgers is analyzing the possible acquisition of Apple Pizzas. Neither firm has debt. The forecasts of Fly-By-Night show that the purchase would increase its annual aftertax cash flow by $390,000 indefinitely. The current market value of Apple Pizzas is $8 million. The current market value of Yummy Burgers is $22 million. The appropriate discount rate for the incremental cash flows is 8 percent. Yummy Burgers is trying to decide whether it would offer 25 percent of its stock or $10 million in cash to Apple Pizzas. a. What is the synergy from the merger?- b. What is the value of Apple Pizzas to Yummy Burgers?- What is the cost to Yummy Burgers of each alternative? d. What is the NPV to Yummy Burgers of each alternative? c. e. What alternative should Yummy Burgers use

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