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In April 1994, Novell Inc. announced its plan to acquire WordPerfect Corporation for $1.4 billion. At the time of the acquisition, the relevant information on the two companies was as follows: Novell WordPerfect $1,200.00 $ 600.00 57.00% 75.00% $42.00 35.00% $75.00 40.00% $25.00 35.00% $40.00 30.00% Revenues Cost of Goods Sold (w/o Depreciation) Depreciation Tax Rate Capital Spending Working Capital (as of Revenue) Beta Expected Growth Rate in Revenues/EBIT Expected period of High Growth Growth rate After High-Growth Period Beta After High-Growth period 1.45 25.00% 1.25 15.00% 10 years 10 years 6.00% 6.00% 1.10 1.10 Capital spending will be offset by depreciation after the high-growth period. Neither firm has any debt outstanding. The treasury bond rate is 78. Assume that market risk premium is 5.5%. A. Estimate the value of Novell, operating independently. B. Estimate the value of WordPerfect, operating independently. C. Estimate the value of the combined firm, with no synergy. D. As a result of the merger, the combined firm is expected to grow 24% a year for the high-growth period. Estimate the value of the combined firm with the higher growth. E. What is the synergy worth? What is the maximum price that Novell can pay for Wordperfect