Sweet Cola Corp. (SCC) is bidding to take over Salty Dog Pretzels (SDP). SCC has 2,800 shares outstanding, selling at $50 per share. SDP has 1,800 shares outstanding, selling at $17.50 a share. SCC estimates the economic gain from the merger to be $22,000.

a. If SDP can be acquired for $20 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 $20 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 $50, so instead of paying $20 cash, SCC issues 0.40 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.)