Case Study $3.$ Operational Synergies

BETA Inc is a listed company, active in the production of furniture sector. Tim Johnson,

the company CEO is considering investing $$1\mathrm{.}2$ million in buying Gamma GmbH and record some

cost savings. A financial planning and analysis team is valuating these cost savings at $$50\mathrm{.}000$ in

the first year, $$80\mathrm{.}000$ for the second year, and $$90\mathrm{.}000$ for the third year. After this, the cost saving

recorded is expected to growth with a constant growth rate of $3\%.$

The expected inflation is expected to be different each year $(4\%$ for the first year, $3\%$ for

the second year and, $1\%$ starting with the third year$)$ and the real FCF discount rate is expected to

be $10\%($adjusted with inflation$).$ Determine the cost savings present value and analyse if in this

case there is an operational synergy. Tax rate $=16\%$