Can you please do the correct thinv for part b The table below shows the projected cash flow statements for ABC Corporation, which is being considered as a target for Willowtech, a large conglomerate. The projected data aer for the postmerger period, and al synergistic effects have been included. ABC currently uses $50$ percent debt, and if ti were acquired, Willowtech would keep the debt ratio at $50\%.$ Both Wilowtech and

ABC have a $20\%$ marginal federal$-$plus$-$state tax rate. Some of the cash flows generated by ABC subsidiary after the merger were retained ot finance asset replacements and growth, while some wil be transferred ot Willowtech to pay dividends on its stock, or for redeployment within the corporation. ABC's available cash flow are expected ot grow at a constant $5\%$ rate after $2027$

Projected Postmerger Cash Flow Statements for ABC Subsidiary sa of December$31($millions of dollars$)$

b$)$ What is the terminal value? What si the value of ABC ot Willowtech?

$$200\mathrm{.}0$

$(2$ marks$)$

$(23$ marks$)$

Details

$20232024$

$2025$

$2026$ Retentions

$$4\mathrm{.}0$ $$4\mathrm{.}0$

$ $7.0$

$ $9.0$ Taxes$(20\%)$

Interest

$$10\mathrm{.}0$ $$11\mathrm{.}0$

$$12\mathrm{.}0$

$$13\mathrm{.}0$ Depreciation

$$10\mathrm{.}0$ $$9\mathrm{.}0$

$$10\mathrm{.}0$

$$10\mathrm{.}0$ Selling &

$$12\mathrm{.}0$ $$14\mathrm{.}0$

$$15\mathrm{.}0$

$$18\mathrm{.}0$ Admin.expenses

COGS as a

$40\%$

percent of sales

Terminal

$5\%$

growth rate

after $5$years.

Rsik fre rate

$10\%$

Market risk

$5\%$

premium

Post merger

$1\mathrm{.}50$

beta

Net sales

$$110\mathrm{.}0$

$1$$$130\mathrm{.}0$

$$160\mathrm{.}0$

$$180\mathrm{.}0$ a$)$ What is the appropriate discount rate for valuing the acquisition?