1. Bloom Corp. is evaluating the possible acquisition of Tulip Inc. at the end of 2019. After the merger, Bloom expects to operate Tulip as a wholly-owned subsidiary of Bloom. Blooms analysts have estimated the following information for Tulip as a stand-alone entity and if it becomes part of Bloom (this incorporates the impact of synergies expected from the merger). The risk-free rate is 5.5% and the market risk premium is 4.5%. Tulip Inc. has 120,000 shares of stock outstanding.

Stand-alone Tulip Inc. Data 2020

Sales	$ 600,000
Cost of Goods Sold	$ 390,000
Selling & Administrative Expenses	$ 68,000
Interest Expense	$ 52,000
Depreciation	$ 40,000
Cash flow plow-back	$ 14,000
Beta	1.2
Growth in FCFE beyond 2020	4.4% per year forever
Tax Rate	34%
Tulip Subsidiary Projections after Merger	2020
Sales	$ 700,000
Cost of Goods Sold	$ 400,000
Selling & Administrative Expenses	$ 72,000
Interest Expense	$ 74,000
Depreciation	$ 50,000
Cash flow plow-back	$ 26,000
Modified Beta	1.28
Growth in FCFE beyond 2020	4.8% per year forever
Tax Rate	40%

1. Estimate the per share stock price of stand-alone Tulip Inc. as of year-end 2019.
2. As of year-end 2019, what is the merger value of Tulip Inc. to Bloom Corp. (on a per share basis)?
3. If Bloom offers a price of $10.25 for each share of Tulip, what is the NPV of the acquisition to Bloom Corp? To Tulip Inc.?