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1. Consider the following premerger information about two firms, Armory and Tudor: Market value of equity Price per share Armory $100 million $50 Tudor $40 million $25 Assume that the acquisition of Tudor by Armory will result in savings of $2.5 million annually in perpetuity for the combined firm. The required rate of return on the combined firm is 8%. The transaction costs will amount to $1 million. Both Armory and Tudor have no debt outstanding. a. What is the present value of the net gain from the merger? b. If a cash offer of $70 million is accepted by Tudor's shareholders, what is the value created for Armory's shareholders? c. If shares are offered in such a way that Tudor's shareholders would possess one- third of the merged entity, what is the value created for Armory's shareholders