Before the merger of RBC the bidding firm and RBT the target firm the share information of the two firms was as follows. Assume that both firms have no debt outstanding.

	RBB	RBT
Shares Outstanding	2,100	1,000
Price per share	$37	$19

RBB has estimated that the value of the synergistic benefits from acquiring RBT is $4,000.

If RBT is willing to be acquired for $21.50 per share in cash, what is the NPV of the merger? (3 marks)

What will the price per share of the merged firm be assuming the conditions in (a)? (2 marks)

Suppose RBT is agreeable to a merger by an exchange of stock. If RBB offers one of its shares for every two of RBTs shares, what will the price per share of the merged firm be? (5 marks)

What is the NPV of the merger assuming the conditions in (iii)? (2 marks)