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  3. 3. (18 points) tucker manufacturing company has a

3. (18 points) Tucker Manufacturing Company has a beta estimated at 1.0. The risk-free rate...

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3. (18 points) Tucker Manufacturing Company has a beta estimated at 1.0. The risk-free rate is 38 and the expected market return is 10%. Tucker expects to pay a $4 dividend next year i.e., D.). This dividend is expected to grow at 5$ per year for the foreseeable future. Tucker has decided to diversity into the home improvement field. A home improvement company. House Depot, has been identified for an acquisition. House Depot has a beta ot 1.2. Tucker has a market value of $8 billion, while House Depot has a market value of $2 billion. The dividend is expected to grow at a rate of 6% per year for the foreseeable future if the merger is completed. (5 points) What is the value of a share of Tucker common stock before the merger? b. (5 points) What is the expected new beta value for Tucker if the merger is completed? c. (5 points) What is the new value of a share of stock for Tucker, assuming that the merger is completed? d. (3 points) Would you recommend that Tucker go ahead with the merger? Why? a

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