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Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1
Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1 million shares outstanding. Big Fish expects a discounted synergistic value of $1 million from the merging of operations of the two firms. If Big Fish pays cash of $2.2 million to Little Fish's shareholders, what is the NPV of the acquisition?
a. $800,000
b. $1,600,000
c. $1,000,000
d. $1,200,000
e. $1,400,000
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