Firm B plans to acquire firm T. Both firms have no debt. B believes the acquisition will increase its total after-tax annual cash flow by $1.6 million for the next three years and then it decreases to 1.2 million, indefinitely. The appropriate discount rate for the incremental cash flows is 12%.The pre-merger information about firm B and target firm T is:

	Firm B	Firm T
Shares Outstanding	450000	240000
Price Per Share	62	45

Firm B gives two offers to Firm T. First, Firm B offers $48 per share in cash. Second, it offers three of its shares for every five of T s shares.

1. What is the synergy from acquiring firm T?