Find value of the synergic benefits

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An acquiring firm is analyzing the possible acquisition of a target firm. Both firms have no debt. The acquiring firm believes the acquisition of the target firm will increase its total after-tax annual cash flow by $3.9 million per year forever. The appropriate discount rate for the incremental cash flows is 9 percent. The current market value of the target firm is $85 million, and the total market value of the acquiring firm is $140 million. What is the value of the synergic benefits from the acquisition of the target firm?

Reference no: EM132722633

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