A. The Floral Shoppe and Maggie's Flowers are all-equity firms. The Floral Shoppe has 1,350 shares outstanding at a market price of $24 a share. Maggie's Flowers has 1,900 shares outstanding at a price of $23 a share. Maggie's Flowers is acquiring The Floral Shoppe for $28,000 in cash. The incremental value of the acquisition is $2,100. What is the net present value of acquiring The Floral Shoppe to Maggie's Flowers?

B.

You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $4,000,000 and it would be depreciated straight-line to zero over 4 years. Because of radiation contamination, it will actually be completely valueless in 4 years. You can lease it for $1,200,000 per year for 4 years. Assume the tax rate is 31 percent. You can borrow at 8 percent before taxes. What is the net advantage to leasing (NAL) from your company's standpoint?

C. Aardvark Enterprises has agreed to be acquired by Lawson Products in exchange for $17,000 worth of Lawson Products stock. Lawson has 1,200 shares of stock outstanding at a price of $14 a share. Aardvark has 2,000 shares outstanding with a market value of $20 a share. The incremental value of the acquisition is $3,700. What is the value of Lawson Products after the merger?