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Barrison is investigating the possible acquisition of Soulmaster. The two firms have the following basic data: Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â BarrisonÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Soulmaster Â Â Â Â Â ...

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Finance

Barrison is investigating the possible acquisition ofSoulmaster. The two firms have the following basic data:
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â BarrisonÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Soulmaster
Â Â Â Â Â NumberofsharesÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 3,000,000Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1,200,000
Â Â Â Â Â CurrentstockpriceÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $75.00Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $25.00
The combined firm will result in asynergy gains of $15m.
a.Â Â Â Â Â Â Â Â What is thevalue of of the combined firm?
b.Â Â Â Â Â Â Â Â What is the NPVof acquisition if Barrison pays $30 in cash for each share ofSoulmaster?
c.Â Â Â Â Â Â Â Â What is the NPVof the acquisition if Barrison offers one share of Barrison forevery two shares of Soulmaster?

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