Gekko Properties is considering purchasing Teldar Properties.Gekko's analysts project that the merger will result in incremental after-tax cash flows of $2 million,$4 million,$5 million,and $10 million over the next four years.The horizon value of the firm's operations,as of Year 4,is expected to be $108 million.Assume all cash flows occur at the end of the year.The acquisition would be made immediately,if it is undertaken.Teldar's post-merger beta is estimated to be 2.0,and its post-merger tax rate would be 35.00%.The risk-free rate is 6.00%,and the market risk premium is 5.70%.What is the value of Teldar to Gekko Properties? Do not round intermediate calculations.
A) $78,888,332
B) $69,812,683
C) $76,793,952
D) $82,378,966
E) $56,548,273

Question

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11ea856c_8adf_3ef9_9aec_319da5a38063_TB1222_00 11ea856c_8adf_3efa_9aec_833a3a640445_TB1222_00 ? Calculate the Teldar's post-merger r_s: ? 11ea856c_8adf_3efb_9aec_032b4bc8ba27_TB1222_00 ? Calculate the total CF₄; 11ea856c_8adf_660c_9aec_59534dc43de1_TB1222_00 ? Calculate the Teldar's value to Gekko: Value = CF₁/(1+r_s/100)+ CF₂/(1+r_s/100)^2 + CF₃/(1+r_s/100)^3 + CF₄/(1+r_s/100)^4 Value = 2,000,000/(1+0.17)+ 4,000,000/(1+0.17)^2 + 5,000,000/(1+0.17)^3 + 118,000,000/(1+0.17)^4 Value = $69,812,683 ? ? ? ?

Gekko Properties Is Considering Purchasing Teldar Properties