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Balboa Co. is analyzing the possible acquisition of CRX Co. Neither firm has debt. The forecasts...

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

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