BUSINESS ASSIGNMENT - A National Hardware Chain

BUSINESS ASSIGNMENT - A National Hardware Chain

Dunbar hardware, a national hardware chain, is considering purchasing a smaller chain, Eastern hardware. Dunbar's analysts project the merger will result in incremental free flows and interest tax savings with a combined present value of $75.52 million, and they have determined that the appropriate discount rate for valuing eastern is 16%. Eastern has 4 million shares outstanding and 5 million debt. Eastern's current price is $15.25. What is the maximum price per share that dunbar should offer? 

 

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