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Determining the expected growth rate

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Company A and Company B are planning to merge. The combined revenue currently is Rs. 20 lacs. Due to economies of scale, the cost of goods sold will reduce from 70% to 60%. The expected growth rate will increase from 5% to 6% after merger, as it will be able to enter new markets. Find the combined value of the firm with and without Synergy, assuming cost of capital to be 10%. Ignore taxes.

Reference no: EM133113182

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