What is the value of teldar to gekko properties

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Gekko Properties is considering purchasing Teldar Properties. Gekko's analysts project that the merger will result in incremental after-tax net cash flows of $2 million, $4 million, $5 million, and $10 million over the next four years. The terminal value of the firm's operations, as of Year 4, is expected to be $107 million. Assume all cash flows occur at the end of the year. The acquisition would be made immediately, if it is undertaken. Teldar's post-merger beta is estimated to be 2.2, and its post-merger tax rate would be 35%. The risk-free rate is 7%, and the market risk premium is 4%. What is the value of Teldar to Gekko Properties? 

A. $72,946,587 

B. $72,848,587 

C. $72,995,587 

D. $72,799,587 

E. $72,897,587

Reference no: EM131140446

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