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When calculating the synergy benefits, do we take the,
– MV of debt and equity?
Or
– MV of equity only?In Chikepe questions, they took only the MV of equity but in Pursuit, they used MV of debt + equity?
It depends on the information provided in the question.
Any benefits due to synergy will increase the total MV of the company (equity + debt), but these benefits will only go to the equity (the debt itself does not get the benefit).
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