The Jupiter Corporation is acquiring the Sumoto Corporation.Neither firm has any debt outstanding. Jupiter has 200 million shares of stock outstanding with a market price of $16 per share. Sumoto has 80 million shares of stock outstanding with a market price of $6 per share.Jupiter's advisors estimate the benefits of synergy to have a present value of $90 million.

a.What is the estimated market value of the combined companies?

b.Suppose Jupiter pays $540 million in cash to buy 100 percent of the common stock of Sumoto.What is the NPV of the merger?

c.If Jupiter offers 15% of the combined firm's stock to Sumoto's shareholders, what is the NPV of the merger?