Above is an example from my professor. If someone could help explain where some of the numbers are coming from, as well as explain the overall situation.

I do not understand how he gets the synergy gain, the NPV to firm B, and the NPV to firm A. Thanks so much!!

SmartArt Box Styles Strikethrough Numerical example Suppose firm A buys B for $150 million cash PVA - PVB 500 100 700 AB Synergy gain-+100 NPV to firm B 150-100 +50 (called the acquisition premium) NPV to firm A- +100 - +50 -+50 If merger was not anticipated, then when it is announced: Stock B up by 50% Stock A up by 10% o add notes NotesComments