how to do q21? Please show all steps

1802/125.230 MTUI AKLI DISD Exhibit 2: Use the following information to answer questions 19-21. Totalfresh Food Inc. is considering the acquisition of GreenVeg at a cash price of $7,200,000. Totalfresh and GreenVeg have annual earnings of $3,500,000 and $600,000, respectively. When they merge it is expected that $400,000 of additional cash flow will be generated the following year and the cash flow will continue to grow at 2% per annum thereafter. The merged firm's cost of capital is expected to be 10%. Totalfresh has 4,000,000 shares on issue and GreenVeg has 1,200,000 shares on issue. The current share prices of Totalfresh and GreenVeg are $8 per share and $5 per share, respectively. Please note that the money for the cash offer of $7,200,000 will be raised by selling new shares. 19. 7-9 Refer to Exhibit 2. Calculate the synergy of the merger. A $4.0m Ofi B. $2.0m C. $5.Om 400,000 $6.0m 10% -3% $3.Om = 5 million Refer to Exhibit 2. Calculate the NPV of the merger. A. $1.2m B. $3.8m NPV- Synergy - Premium = 5-1.2 C. $5.Om Premium 37,200.000 - 1.200,000 $5 = 1.2m. D. $6.0m E. $7.2m 20. Acquisition price (million) 7.2 Additional cash flow next year(million) 0.40 Synergy (million) 0.4/(0.1-0.02)=5 Premium (million) 7.2-6=1.2 NPV(million) 5-1.2=3.8 21. Refer to Exhibit 2. Calculate the share price after the merger. $13.00 B. $8.00 $5.00 $9.52 $8.95* After merger Share price ($) 3.8/4+8=8.95