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Firm A is considering a merger with Firm B. The proposed merger estimates that the...

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Finance

Firm A is considering a merger with Firm B. The proposed merger estimates that the present value of the free cash flow to equity (FCFE) is $75 million. The target company is an all-equity firm, with 5 million shares outstanding, trading at $10 per share. If the relevant discount rate is 10%, what is the maximum price that the acquiring firm should be willing to offer?

a. $20.00/share

b. $15.00/share

c. $10.00/share

d. $5.00/share

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