Question: A) $196B) $224C) $245D) $280E) $350 Acquirer is considering purchasing Target. The standalone I/S (income statement) and estimated synergies for next year (year 1) are

A) $196B) $224C) $245D) $280E) $350

Acquirer is considering purchasing Target. The standalone I/S (income statement) and estimated synergies for next year (year 1) are shown in the following table. Assume that the synergies will grow at a perpetual annual rate of 2%, the combined company's WACC is 10% and tax rate 30%. What is the total value of synergies? There are no synergies in capital expenditure or working capital. All figures are in $m. Acquirer Target Synergy Sales 300 60 20 CGS 100 20 -5 SG&A 50 10 -3 Depreciation 70 20 O

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