2. You are considering a merger of two companies: Value of Assets (MV) Debt (MV) Maturity of Debt Volatility Rf Company A $ 10 Billion $ 5 Billion 5 years 35% 2% Company B $ 100 Billion $ 10 Billion 5 years 40% 2% If company B wants to buy Company A's equity and pay off its debt as part of the merger, (a) use the Black-Scholes model to analyze the market value of the equity and the debt of A and B before the merger (b) If the two firms are merged and there is no synergy, and the combined firm has volatility of 32%, use the Black-Scholes model to analyze the market value of the equity and the debt of B of the combined firm (c) does this merger makes sense for the stockholders of A and B? Explain 2. You are considering a merger of two companies: Value of Assets (MV) Debt (MV) Maturity of Debt Volatility Rf Company A $ 10 Billion $ 5 Billion 5 years 35% 2% Company B $ 100 Billion $ 10 Billion 5 years 40% 2% If company B wants to buy Company A's equity and pay off its debt as part of the merger, (a) use the Black-Scholes model to analyze the market value of the equity and the debt of A and B before the merger (b) If the two firms are merged and there is no synergy, and the combined firm has volatility of 32%, use the Black-Scholes model to analyze the market value of the equity and the debt of B of the combined firm (c) does this merger makes sense for the stockholders of A and B? Explain