Mercury Estates is taking over Venus Housing Corp. Mercury is valued at $9,000,000, whereas Venus' total value is $4,500,000. Due to the similarities in their operations, Mercury expects a reduction in administrative expenses of $120,000 per year in perpetuity. It is willing to buy Venus for $6,300,000 in cash. Mercury's cost of capital is 12%.

1. What is the economic gain from the merger?

2. What is the net cost of the deal to Mercury?

3. If the company pays cash for the acquisition, what is the net present value of the deal?