Bass Pro is contemplating the acquisition of Titan Fishman, Inc. The values of the two companies as separate entities are $200 million and $100 million, respectively. Bass Pro estimates that by combining the two companies, it will reduce after-tax marketing and administrative costs by $10 million per year in perpetuity. Bass Pro is willing to pay $150 million cash for Titan Fishman. The opportunity cost of capital is 8% and the tax rate is 30%

Part A: What would be the gain from the merger?

Part B: What is the cost of the cash offer?

Part C: What is the NPV for Bass Pro of the acquisition under the cash offer?

Part D: What if that instead of making a cash offer, Bass Pro considers offering Titan Fishman

shareholders a 30% holding in Bass Pro. What will be the NPV for Bass Pro under the stock offer?