Question: Above is an example from my professor. If someone could help explain where some of the numbers are coming from, as well as explain the

Above is an example from my professor. If someone could help

Above is an example from my professor. If someone could help explain where some of the numbers are coming from, as well as explain the overall situation.

I do not understand how he gets the synergy gain, the NPV to firm B, and the NPV to firm A. Thanks so much!!

SmartArt Box Styles Strikethrough Numerical example Suppose firm A buys B for $150 million cash PVA - PVB 500 100 700 AB Synergy gain-+100 NPV to firm B 150-100 +50 (called the acquisition premium) NPV to firm A- +100 - +50 -+50 If merger was not anticipated, then when it is announced: Stock B up by 50% Stock A up by 10% o add notes NotesComments

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