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r corporate finance question : western Pizza Palace is considering purchasing a smaller chain, Western Mountain Pizza.

r corporate finance question : western Pizza Palace is considering purchasing a smaller chain, Western Mountain Pizza. PP’s analysts expect the merger to result in incremental net cash flows as follows: Year1=$1,500,000, Year2 = $2,000,000, Year3 = $3,000,000, Year4 =$5,000,000. In addition, Western’s Year4 cash flows are expected to grow at a constant rate of 5% after Year4. Western’s post merger beta is expected to be 1.5 and its tax rate would be 40%. The risk free rate is presently 5% and the market risk premium is 4%. What is the value of Western to Pizza Palace?

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