Firm A is considering a merger with Firm B. Based on the following data, what is the synergy gain from the merger?

Firm A:

Market value of debt: $2 million

Market value of equity: $4 million

Number of shares: 0.2 million

Estimated total firm value based on value-based management model: 8 million

Firm B:

Market value of debt: $5 million

Market value of equity: $6 million

Number of shares: 0.5 million

Estimated total firm value based on value-based management model: 12.8 million

Select one:

a. $4.5 millionb. $3.8 millionc. $5.1 milliond. $2.4 millione. $1.2 million