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 $390,000 indefinitely. The current market value of Flash-in-the-Pan is $11 million. The current market value of Fly-By-Night is $27 million. The appropriate discount rate for the incremental cash flows is 8 percent. Fly-By-Night is trying to decide whether it should offer 35 percent of its stock or $14 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.)