Costs, gain, and NPV of the merger
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Sink, Inc., plans to merge with Swim Corp. The capital market places a value on Sink of $7.875 million and Swim is valued at $500,000, when they are evaluated separately. After the merger, economies of scale will result in additional cash flows, the present of which is $250,000. Sink will buy Swim for $600,000 in cash. Sink has 150,000 shares outstanding. What are the costs, gain, and NPV of the merger?
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The solution explains how to calculate costs, gain, and NPV of the merger
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