Problem 29-16 Mergers and Shareholder Value The Chocolate Ice Cream Company and the Vanilla Ice Cream Company have agreed to merge and form Fudge Swirl Consolidated. Both companies are exactly alike except that they are located in different towns The end-of-period value of each firm is determined by the weather, as shown below. There will be no synergy to the merger State Probability Value 3 $ 300,000 480,000 950,000 Rainy Warm .2 Hot .5 The weather conditions in each town are independent of those in the other. Furthermore, each company has an outstanding debt claim of $480,000. Assume that no premiums are paid in the merger a. What are the possible values of the combined company? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32 Possible states Joint Value Rain-Rain 600000 Rain-Warm 780000 Rain-Hot 1250000 Warm-Warm 960000 Warm-Hot 1430000 Hot-Hot 1900000 b. What are the possible values of end-of-period debt values and stock values after the merger? (Leave no cells blank - be certain to enter "O" wherever required. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Debt Value Stock Value $ 3000000 Rain-Rain Rain-Warm Rain-Hot Warm-Warm Warm-Hot Hot-Hot c. How much do stockholders and bondholders each gain or lose if the merger is undertaken? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Bondholder gain/loss Stockholder gain/loss