1. Both of Firm A and Firm B are 100 equity firms. You estimate that the incremental value of the acquisition is RM100,000. Firm B has indicated that it will agree to a sale if the price is RM150,000, payable in cash or stock. Firm B is worth RM100 as a stand-alone, so this is the minimum value that we could assign to Firm B. Should Firm A acquire Firm B? Should it pay in cash or stock? Calculate the value of firm A after merger.

	Firm A	Firm B
Price per share	RM2	RM1
Number of shares	50,000	100,0000

(14 marks)

2. Briefly explain TWO (2) reasons of mergers.

(2 marks)

3. Merger maybe profitable but are they good for the economy? Explain your answer towards this statement.

(6 marks)