Question: fly - by - night couriers is analyzing the possible acquisition of flash - in - the - pan restaurants. neither firm has debt. the

fly-by-night couriers is analyzing the possible acquisition of flash-in-the-pan restaurants. neither firm has debt. the forecasts of fly-by-night show that the purchase would increase its annual aftertax cash flow by $340,000 indefinitely. the current market value of flash-in-the-pan is $10 million. the current market value of fly-by-night is $24 milllion. the appropriate discount rate for the incremental cash flows is 8 percent. fly-by-night is trying to decide whether it should offer 35 percent of its stock or $13 million in cash to flash-in-the-pan. What is the cost to fly-by-night of each alternative? what is the NPV to fly-by-night of each alternative?

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