You have been asked to analyze the synergy in a merger of two small western banks, and have been provided the following information on both banks.

	BancFirst	Farm Bank
Net Income	144	250
Book Value of Equity	1200	2500
Beta	1.00	1.00

Both firms are in stable growth and are growing 6% a year. The merger is motivated entirely by cost savings. The treasury bond rate is 4%. Both banks have tax rates of 40%. Market risk premium is 7.5%.

a) What is the equity value of BancFirst?

b) What is the equity value of Farm Bank?

c) If the combined bank will save $50 a year in operating expenses starting right away, what will be the merged banks ROE?