You are analyzing AT&T’s potential acquisition of Netflix. AT&T plans to offer \($150\) billion as the purchase price for Netflix, and it will need to issue additional debt and equity to finance such a large acquisition. You estimate that the issuance costs will be \($800\) million and will be paid as soon as the transaction closes.
You estimate the incremental free cash flows from the acquisition will be \($11\) billion in the first year and will grow at 3% per year thereafter. What is the NPV of the proposed acquisition?