What is the value of synergy? (Hint: the combined value of the company under assumptions - the combined value of both companies working independently) Select D, E, or F Select 2 correct answer(s) a) The Value of Despacito + the Value of Latin working independently is $229.50 million b) The Value of Despacito + the Value of Latin working independently is $308.12 million c) The Value of Despacito +the Value of Latin working independently is $346.25 million d) The value of synergies is $89.29 million e) The value of synergies is $65.71 million f) The value of synergies is $6.57 million Question 4 (2 points) Suppose that Latin Inc. wants to acquire Despacito Inc. Both companies are all equity financed and they expect to have a stable growth of 3% starting this year (2022). The weighted average cost of capital (WACC) for Latin is 12% and for Despacito 16 %. End of last year (2021) free cash flow for Latin was $20 million and for Despacito $10 million. Assume that today is January 1, 2022. Answer the following questions: 1) What is the combined value of both companies working independently (Value of Despacito +Value of Latin)? Select A, B, or C 2) Calculate the value of the combined company under the following assumptions: .WACC for the Combined firm is the weighted average of the cost of capital of Latin and Despacito, with the weights calculated based on the value of the firms. • Free cash flows for the combined company are the sum of both companies' cashflows, plus an additional 15% due to an increase in sales. • The combined company is expected to have stable growth of 4% starting this year (2022) Question 4 (2 points) Suppose that Latin Inc. wants to acquire Despacito Inc. Both companies are all equity financed and they expect to have a stable growth of 3% starting this year (2022). The weighted average cost of capital (WACC) for Latin is 12% and for Despacito 16 %. End of last year (2021) free cash flow for Latin was $20 million and for Despacito $10 million. Assume that today is January 1, 2022. Answer the following questions: 1) What is the combined value of both companies working independently (Value of Despacito +Value of Latin)? Select A, B, or C 2) Calculate the value of the combined company under the following assumptions: .WACC for the Combined firm is the weighted average of the cost of capital of Latin and Despacito, with the weights calculated based on the value of the firms. • Free cash flows for the combined company are the sum of both companies' cashflows, plus an additional 15% due to an increase in sales. • The combined company is expected to have stable growth of 4% starting this year (2022) What is the value of synergy? (Hint: the combined value of the company under assumptions - the combined value of both companies working independently) Select D, E, or F Select 2 correct answer(s) a) The Value of Despacito + the Value of Latin working independently is $229.50 million b) The Value of Despacito + the Value of Latin working independently is $308.12 million c) The Value of Despacito +the Value of Latin working independently is $346.25 million d) The value of synergies is $89.29 million e) The value of synergies is $65.71 million f) The value of synergies is $6.57 million