Problem #3: Firms A and B want to merge, where the estimated synergy equals 10 . If the firms merge, no debt will be retired. Hence, the outstanding debt of firms A and B will continue to be outstanding in the merged firm. Firm A has a Face Value of debt of 65 , and firm B has a Face Value of debt of 25. e assume that there are four possible future states of the economy. The firms' value in each ate is as follows. Including the synergy of 10 , what is the difference in debt values between that of the merged firm and the sum of those of the two pre-merger firms? Including the synergy of 10 , what is the difference in equity values between that of the merged firm and sum of those of the two pre-merger firms? Does this merger create or destroy equity-holder value? Explain. What level of synergy makes equity holders indifferent to this merger? Problem #3: Firms A and B want to merge, where the estimated synergy equals 10 . If the firms merge, no debt will be retired. Hence, the outstanding debt of firms A and B will continue to be outstanding in the merged firm. Firm A has a Face Value of debt of 65 , and firm B has a Face Value of debt of 25. e assume that there are four possible future states of the economy. The firms' value in each ate is as follows. Including the synergy of 10 , what is the difference in debt values between that of the merged firm and the sum of those of the two pre-merger firms? Including the synergy of 10 , what is the difference in equity values between that of the merged firm and sum of those of the two pre-merger firms? Does this merger create or destroy equity-holder value? Explain. What level of synergy makes equity holders indifferent to this merger