Question 4 (20 points total) Anglo-American Aerospace (AAA) is a manufacturer of space alloys interested in making an acquisition of Airbus (Airbus), a maker of landing gear. Relevant financial information is shown below. AAA Bu D/E Kd 1.35 0.65 6.50% AIRBUS BL D/E FCF* Synergies* 2.50 4.00 $50.0 10.0 OTHER Bd Kf ERP Tax 0.30 2.65% 7.00% 21.00% * Current FCFs expected to grow at 3% in perpetuity Represents pre-tax cost synergies expected to stay flat with no growth AAA negotiated with Airbus a purchase price of $850M. AAA would finance the Airbus transaction using 70% non-recourse debt (at 8.00% cost of debt) and 30% equity. Note: Assume that the Airbus acquisition debt stays outstanding in infinity and there are no debt repayments. A) What is AAA's WACC? (5 points) B) Based on proper corporate finance theory, what is the NPV of Airbus' business? (10 points) | C) Should AAA acquire Airbus? (5 points) Question 4 (20 points total) Anglo-American Aerospace (AAA) is a manufacturer of space alloys interested in making an acquisition of Airbus (Airbus), a maker of landing gear. Relevant financial information is shown below. AAA Bu D/E Kd 1.35 0.65 6.50% AIRBUS BL D/E FCF* Synergies* 2.50 4.00 $50.0 10.0 OTHER Bd Kf ERP Tax 0.30 2.65% 7.00% 21.00% * Current FCFs expected to grow at 3% in perpetuity Represents pre-tax cost synergies expected to stay flat with no growth AAA negotiated with Airbus a purchase price of $850M. AAA would finance the Airbus transaction using 70% non-recourse debt (at 8.00% cost of debt) and 30% equity. Note: Assume that the Airbus acquisition debt stays outstanding in infinity and there are no debt repayments. A) What is AAA's WACC? (5 points) B) Based on proper corporate finance theory, what is the NPV of Airbus' business? (10 points) | C) Should AAA acquire Airbus? (5 points)