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Sweet Cola Corp. ( SCC ) is bidding to take over Salty Dog Pretzels ( SDP ) . SCC has 3 , 5 0 0

Sweet Cola Corp. (SCC) is bidding to take over Salty Dog Pretzels (SDP). SCC has 3,500 shares outstanding, selling at $60 per share.
SDP has 3,000 shares outstanding, selling at $18.50 a share. SCC estimates the economic gain from the merger to be $28,000.
a. If SDP can be acquired for $22 a share, what is the NPV of the merger to SCC?
b. What will SCC sell for, per-share, when the market learns that it plans to acquire SDP for $22 a share? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
c. What will SDP sell for?
d. What are the percentage gains to the shareholders of each firm? (Do not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.)
e. Now suppose that the merger takes place through an exchange of stock. On the basis of the premerger prices of the firms, SCC
sells for $60, so instead of paying $22 cash, SCC issues 0.37 of its shares for every SDP share acquired. What will be the price of the
merged firm? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
f. What is the NPV of the merger to SCC when it uses an exchange of stock? (Do not round intermediate calculations. Round your
answer to 2 decimal places.)
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