Apple is buying Google using a mix of cash and shares. They will be paying $3M in cash, and the remainder in equity in the merged firm. Apple currently has a market value of $85M, and Google has a market value of $11M. Purchasing Google will allow BuyCo to do a project with no upfront costs that will produce an EBIT of $700,000 each year for the foreseeable future, and will also produce a single lump sum cash flow of $2.5M ten years from today. The tax rate is 32% and the riskless rate is 2%. Googleis 60% debt financed and 40% equity financed, has an unlevered cost of equity of 8% and a cost of debt of 5%. Apple has 100,000 shares outstanding.

What is Googles weighted average cost of capital?

What is the NPV of the synergies of this merger?

What price should Apple pay for Google if they are willing to offer Googless shareholders half of the synergies?

How many shares should Apple offer Googles shareholders in payment, taking into account the $3M in cash they are paying?