Use the Table Below to Answer the Following Question

question 114

Essay

Use the table below to answer the following question. What would be the required synergy given a premium of $250,000,000 if the company thinks that it will take two years to implement the synergies, and if the cost of capital is 15 percent? What does this number mean?
$$\begin{array} { | l | l | l | l | } \hline \begin{array} { c } \text { Years until syuergies } \\\text { are inuplemeuted }\end{array} & \text { Cost of capital } & & \\\hline & 10 \% & 15 \% & 20 \% \\\hline 0 & 0.100 & 0.150 & 0.200 \\\hline 1 & 0.110 & 0.173 & 0.240 \\\hline 2& 0.121 & 0.198 & 0.288 \\\hline 3 & 0.133 & 0.228 & 0.346 \\\hline 4 & 0.146 & 0.262 & 0.415 \\\hline5& 0.161 & 0.302 & 0.498 \\\hline\end{array}$$

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