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Fly - By - Night Couriers is analyzing the possible acquisition of Flash - in - the - Pan Restaurants. Neither firm has debt. The

Fly-By-Night Couriers is analyzing the possible acquisition of Flash-in-the-Pan Restaurants. Neither firm has debt. The forecasts of Fly-By-Night show that the purchase would increase its annual aftertax cash flow by $330,000 indefinitely. The current market value of Flash-in-the-Pan is $10 million. The current market value of Fly-By-Night is $18 million. The appropriate discount rate for the incremental cash flows is 10 percent. Fly-By-Night is trying to decide whether it should offer 40 percent of its stock or $13 million in cash to Flash-in-the-Pan.
a. What is the synergy from the merger? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g.,1,234,567.)
b. What is the value of Flash-in-the-Pan to Fly-By-Night? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g.,1,234,567.)
c. What is the cost to Fly-By-Night of each alternative? (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, e.g.,1,234,567.)
d. What is the NPV to Fly-By-Night of each alternative? (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, e.g.,1,234,567.)

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