Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding.

	Firm B			Firm T
Shares outstanding		6,200			1,400
Price per share	$	48		$	18

Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,600.

a.	If Firm T is willing to be acquired for $20 per share in cash, what is the NPV of the merger? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

NPV

$

b.	What will the price per share of the merged firm be assuming the conditions in (a)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Share price

$

c.	If Firm T is willing to be acquired for $20 per share in cash, what is the merger premium? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Merger premium

$

d.	Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every two of T 's shares, what will the price per share of the merged firm be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Price per share

$

e.	What is the NPV of the merger assuming the conditions in (d)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV

$

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