A merger is proposed between corporations A and B. A new entity will be formed, corporation C. Firm A will pay $3,000,000 for the merger. They will receive a tax carryforward of $90,000. After the merger, Firm C will experience an increase in profit of $300,000 for the next 10 years, and $100,000 for 10 years following the first. There is a flat synergy benefit of $20,000 a year. Assume a discount rate of 5%. a) Calculate the net present value of the merger. Should they go ahead with it? b) A regulator is watching over the merger closely. They determine that the merger is harmful to competition and impose an immediate penalty of $500,000 to firm C if the merger goes ahead. Does the merger happen now? c) There are 100,000 shares of Firm B outstanding, currently trading for $22 apiece. Firm A wants to buy 100% of those shares to complete the merger. What is the % premium the shares commanded if the merger price was $3,000,000 ?