What is the value of the synergies

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Two supermarket chains agree to merge. Executives of both chains agree that cost savings  of 2% of annual revenues can be achieved (combined annual revenues for the year of the merger is 300 millions). Revenues are expected to grow at an annual nominal rate of 5%. Both chains' cost of debt stands currently at 6%. Profits are taxed at a 35% rate. What is the value of the synergies?

Reference no: EM132398385

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