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A Canadian mining firm wishes to acquire a Brazilian copper producer. The current market value in terms of the Brazilian currency denomination (BRL) of the Brazilian firm is BRL 7.5 billion. Most mergers of this nature require a takeover premium of 20 percent. Also, the Canadian firm must pay transaction costs of CAD 200 million and incur a cost of CAD 250 million to integrate the Brazilian firm’s operations into its own operations. Estimate the total cost of the acquisition. Assume spot CADBRL equals 2.5.

Financial Management, Finance

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