Balboa Co. is analyzing the possible acquisition of CRX Co. Neither firm has debt. The forecasts of Balboa show that the purchase would increase its annual after-tax cash flow by $1.8 Mil (synergy gain) indefinitely. The current market value of CRX is $60 mil. The current market value of Balboa is $104 mil. The appropriate discount rate for the incremental cash flows is 12%. Balboa decides to newly issue 40% of current shares outstanding to acquire CRX Co (exchange with CRX shares). Calculate the NPV of this merger proposal.
A. $35.217 B. $9.306 C. $7.304 D. $72.108 E. $88.405 F. $45.539 G. $23.857 H. $15.521
Get Answers For Free
Most questions answered within 1 hours.