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    Velcro Saddles: What is the gain from merger? What is the cost of the cash offer? What is the NPV of the acquisition under the cash offer?

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    Velcro Saddles is contemplating the acquisition of Pogo Ski Sticks, Inc. The values of the two companies as separate entities are $20 million and $10 million, respectively. Velcro Saddles estimates that by combining the two companies, it will reduce marketing and administrative costs by $500,000 per year in perpetuity. Velcro Saddles is willing to pay $14 million cash for Pogo. The opportunity cost of capital is 8 percent.

    What is the gain from merger?
    What is the cost of the cash offer?
    What is the NPV of the acquisition under the cash offer?

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    https://brainmass.com/business/net-present-value/83979

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