$7.$ What is the maximum amount BAT could have paid for Reynolds and still earned its cost of capital? Recall that BAT acquired the remaining $57\mathrm{.}8\%$ of Reynolds that it did not already own. Did BAT overpay for Reynolds, based on the information given in the case? Explain your answer. $($Hint: Use your answers to questions $1$ and $5.)$

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$2.$ Does your answer to question $1$ include a purchase price premium?

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$3.$ What are the key limitations of the comparable$-$companies valuation methodology?

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$4.$ In estimating the value of anticipated cost savings, should an analyst use Reynolds marginal tax rate of $40\%$ or its effective tax rate of $22\%?$ Explain your answer.

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$5.$ What is the $2018$ after$-$tax present value of the $$400$ million pretax annual cost savings expected to start in $2019?$ Assume the appropriate cost of capital is $10\%$ and that the savings will continue in perpetuity. Show your work.

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$6.$ What are the key assumptions underlying the valuation of Reynolds? Include both the valuation of Reynolds as a standalone business and synergy value.

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$7.$ What is the maximum amount BAT could have paid for Reynolds and still earned its cost of capital? Recall that BAT acquired the remaining $57\mathrm{.}8\%$ of Reynolds that it did not already own. Did BAT overpay for Reynolds, based on the information given in the case? Explain your answer. $($Hint: Use your answers to questions $1$ and $5.)$

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$7.$ What is the maximum amount BAT could have paid for Reynolds and still earned its cost of capital? Recall that BAT acquired the remaining $57\mathrm{.}8\%$ of Reynolds that it did not already own. Did BAT overpay for Reynolds, based on the information given in the case? Explain your answer. $($Hint: Use your answers to questions $1$ and $5.)$

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