Velcro Saddles is contemplating the acquisition of Skiers’ Airbags Inc. The values of the two companies...

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Velcro Saddles is contemplating the acquisition of Skiers’Airbags Inc. The values of the two companies as separate entitiesare $52 million and $26 million, respectively. Velcro Saddlesestimates that by combining the two companies, it will reducemarketing and administrative costs by $660,000 per year inperpetuity. Velcro Saddles is willing to pay $30 million cash forSkiers’. The opportunity cost of capital is 10%.
a. What is the gain from the merger?(Enter your answer in millions rounded to 2 decimalplaces.)
Gain from Merger?
What is the cost of the cash offer? (Enter your answerin millions.)
Cost of the cash offer?
c. What is the NPV of the acquisition under thecash offer? (Enter your answer in millions rounded to 2decimal places.)
NPV?

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Velcro Saddles is contemplating the acquisition of Skiers’Airbags Inc. The values of the two companies as separate entitiesare $52 million and $26 million, respectively. Velcro Saddlesestimates that by combining the two companies, it will reducemarketing and administrative costs by $660,000 per year inperpetuity. Velcro Saddles is willing to pay $30 million cash forSkiers’. The opportunity cost of capital is 10%.a. What is the gain from the merger?(Enter your answer in millions rounded to 2 decimalplaces.)Gain from Merger?What is the cost of the cash offer? (Enter your answerin millions.)Cost of the cash offer?c. What is the NPV of the acquisition under thecash offer? (Enter your answer in millions rounded to 2decimal places.)NPV?