Creation vacations Inc. is looking at acquiring venetian escapes in an all cash deal. Creation vacations has 295,500 shares outstanding at $52 per share and venetian escapes, a private company has expected annual cash flows of $315,000 per year (for ever). Both firms have a 10% cost of capital. Croatian vacation enterprises that with their marketing and sales expertise, that would be able to increase venetian escapes annual cash flows by 5% annual if the firms combine. 

What is the maximum cash price creation vacations should offer?

Answer rating: 100% (QA)

The maximum cash price that Creation Vacations should offer can be determined by calculating the pre... View the full answer