Company A has a EBIT of $4 Million and a cost of equity of 15%. Company B has EBIT of $1 Million and a cost of equity of 18%. Company A is buying company B in a merger where the merged firm will have an EBIT of $7 Million. The tax rate is 40% and there merger will require an increase in working capital of company A by $400,000. Company A has 2.5 Million shares outstanding and Company B has 850,000 share outstanding.

What is the PV of the synergies of the merger?

What price should company A offer to pay if they are offering company B shareholders 40% of the synergies?

If company A is planning on paying 75% in cash and 25% in shares, how many new shares should be issued to compensate company B shareholders?

What are some likely reasons company A is wanting to pay mostly in cash?

I APPRECIATE ANY HELP