FN 301: Financial Analysis SEMINAR QUESTIONS VII 1. Consider a merger between two all-equity firms, Alpha and Beta, where Pre-merger Firm Alpha Firm Beta Price per share (Tshs.) 100 Number of Outstanding shares 50,000 20,000 200 The incremental value of the acquisition is AV=Tshs. 2,000,000/= and shareholders of Beta would sell at Tshs. 3,000,000/=, payable in cash or stock. 1) Calculate the NPV of the merger if Alpha makes a Tshs. 3,000,000/= cash offer. ii) Suppose that Alpha offers 15,000 of its shares in exchange for the 20,000 shares of firm Beta. Is this the same as the previous cash offer? Why? iii) How many shares does Alpha have to offer so that the firm Beta shareholders receive only Tshs. 3,000,000/= of firm Alpha's stock? (3 Points)