Gekko Properties Is Considering Purchasing Teldar Properties

Multiple Choice

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