4.2 Consider the following pre-merger information concerning two firms, Capitec Bank and Mercantile Bank Ltd: Data Capitec Mercantile Shares issued 10000 2000 Price per share R105 R25 Capitec wishes to acquire Mercantile bank and believes that there will be synergistic benefits of R50 000. Assume both firms have no debt.

4.2.1 If Mercantile bank is willing to be acquired at R30 per share, what is the NPV of the merger? (5) done

4.2.2 Calculate the price per share (PPS) of the merged company. (5) done

4.2.3 Calculate the merger premium given the condition in 4.2.1. (5) (Need assistance with this question)