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What is the maximum price per share that dunbar should offer

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Question - Dunbar LTC, a national nursing home chain is considering purchasing a smaller chain, Eastern Nursing Homes. Dunbar's analysts project that the merger will result in free cash flows to equity holders with a present value of $72.52 million and they have determined that the appropriate discount rate for valuing Eastern is 16 percent. Eastern has 4 million shares outstanding and no debt. Eastern's current price is $16.25. What is the maximum price per share that Dunbar should offer?

Reference no: EM132765038

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