ABC Corp is buying XYZ Corp. A share of XYZ currently costs $19 with 200,000 shares outstanding. ABC has a share price of $25, with 200,000 shares outstanding. After the merger, the new firm with be able to reduce its net working capital by $ 750,000 and increase its EBIT by $300,000 per year for the next 30 years. The cost of capital for new firm is 18%. ABC will be pay $5 per share plus stock for XYZ.

a. What is the NPV of the Synergies of this merger?

b. How many shares of merged firm should ABC offer per share of XYZ if they want to offer XYZ 30% of the synergies?