Sunshine's sales are $625 million in the current fiscal year (which ends today) and are expected to grow 25% per year for the next three years, and then 4% per year (forever) once the company's growth moderates to a steady state. Sunshine’s current stock price is $14 per share, and the company has 175 million shares outstanding. Sunshine's growth has attracted the attention of one of its older and larger competitors: Coca Cola. Coke manufactures carbonated soft drinks, and would like to acquire a brand in the increasingly popular non-carbonated, healthy beverage category. Coke’s management has no intention of interfering with the production or marketing of Sunshine's drinks, but feels that as a more established competitor with significantly more proven relationships with retailers it can substantially lower Sunshine's distribution costs which are 7 cents per dollar of sales. Coke is confident that the most important synergy that it can realize from an acquisition of Sunshine is lowering that cost to 3 cents per dollar of sales (by integrating the new products into Coke's existing distribution system), starting in the year after deal completion. Coke has determined that an appropriate discount rate which reflects the risk of Sunshine's cash flows is 12%. Assuming this is the only operational synergy that Coke expects from the acquisition, and ignoring any deal-related transaction costs and all taxes, what is the maximum price per share that Coke should offer Sunshine’s shareholders in an acquisition? Round to two decimal places. If Coke expects to increase Sunshine’s sales with the acquisition by 35% for the next 3 years and expects the same decrease in distribution costs, what is the maximum offer price Coke should offer (synergies from both increasing revenue and decreasing cost)? If Sunshine’s net income tends to be 20% of sales and we expect this to continue after the merger what is the synergy value and max offer price based on this increase in net income due to the increased sales? (distribution costs would be included already as an expense here). Make a sensitivity table using your information from part B and use the following growth rates in sales for the first 3 years: 25%, 35%, 45%, and 55% (keep the ongoing rate at 4%); Combine this with discount rates of 14%, 12%, 10%, and 8%. Record the max offer price with these different combinations of scenarios.