Three Guys Burgers, Inc., has offered $18 million for all of the common stock in Two Guys Fries, Corp. The current market capitalization of Two Guys as an independent company is $15.9 million. Assume the required return is 8.1 percent and the synergy from the acquisition is a perpetuity.
What is the minimum annual synergy that Three Guys feels it will gain from the acquisition?
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