Assume the following post-acquisition yearly free cash flows and interest expense (in millions of dollars). Assume that the tax rate is 40% and the horizon growth rate is 6%.

                                    2017   2018   2019   2020   2021  

FCF                            11.70   10.50   16.50   20.70   21.94    

Interest Expense           5.00     6.50     6.50     7.00     8.16

Target’s data are: rRF = 7%; RPM = 4%, beta = 1.3, wd =30%, rd = 9%. Assume that the target has $50 million in debt.

What is the equity value of the target to the acquirer?

$216.12

$316.20

$366.18

$416.46