At the beginning of the year Ham Inc.'s management is considering making an offer to buy Egg Corporation. Egg's projected operating income (EBIT) for the current year is $25.0 million, but Ham believes that if the two firms were merged, it could consolidate some operations, reduce Egg's expenses, and raise its EBIT to $39.0 million. Neither company uses any debt, and they both pay income taxes at a 40% rate. Ham has a better reputation among investors, who regard it as better managed and also less risky, so Ham's stock has a P/E ratio of 18 versus a P/E of 12 for Egg. Since Ham's management will be running the entire enterprise after a merger, investors will value the resulting corporation based on Ham's P/E. Based on expected market values, how much synergy should the merger create? Do
not round your intermediate calculations.
A. $301.50 million
B. $277.38 million
C. $241.2 million
D. $205.02 million
E. $229.14 million
Answer: C
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What are the three types of data needed from consumers to develop a perceptual map?
What will be an ideal response?