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First question (60%). Free Cash Flow valuation. Please compute the net present value (NPV) of the acquisition. The Orlando Corporation is viewed as a possible takeover target by Florida, Inc. Currently Orlando uses 15 percent debt in its capital structure, but Florida plans to increase the debt ratio to 40 percent if the acquisition is consummated. After-tax cost of debt capital for Orlando is estimated to be 10 percent, which holds constant under either capital structure. The cost of equity of Orlando after acquisition is expected to be 20 percent. The current market value of Orlando's outstanding debt is $ 250 million, all of which will be assumed by Florida. Beta intends to pay $ 40 million in cash and common stock for all Orlando's stock in addition to assuming all Orlando's debt. Currently, the market price of Orlando's common stock is $ 210 million. Selected items from Orlando's financial data are as follows: (millions) 2021 2022 2023 2024 Thereafter Net Sales $150.0 $195.0 $253.5 $329.6 $428.4 Administrative and selling expenses (S.G.A.) $30.0 $35.0 $38.0 $40.0 $45.0 Depreciation $18.0 $20.0 $22.0 $25.0 $30.0 Capital expenditure (C.A.P.E.X.) $20 $22 $25 $28 $30 In addition, the cost of goods sold (C.O.G.S.) runs 60 percent of sales and the marginal tax rate is 20 percent. First question (60%). Free Cash Flow valuation. Please compute the net present value (NPV) of the acquisition. The Orlando Corporation is viewed as a possible takeover target by Florida, Inc. Currently Orlando uses 15 percent debt in its capital structure, but Florida plans to increase the debt ratio to 40 percent if the acquisition is consummated. After-tax cost of debt capital for Orlando is estimated to be 10 percent, which holds constant under either capital structure. The cost of equity of Orlando after acquisition is expected to be 20 percent. The current market value of Orlando's outstanding debt is $ 250 million, all of which will be assumed by Florida. Beta intends to pay $ 40 million in cash and common stock for all Orlando's stock in addition to assuming all Orlando's debt. Currently, the market price of Orlando's common stock is $ 210 million. Selected items from Orlando's financial data are as follows: (millions) 2021 2022 2023 2024 Thereafter Net Sales $150.0 $195.0 $253.5 $329.6 $428.4 Administrative and selling expenses (S.G.A.) $30.0 $35.0 $38.0 $40.0 $45.0 Depreciation $18.0 $20.0 $22.0 $25.0 $30.0 Capital expenditure (C.A.P.E.X.) $20 $22 $25 $28 $30 In addition, the cost of goods sold (C.O.G.S.) runs 60 percent of sales and the marginal tax rate is 20 percent