1. Pizza Palace (PP), is considering purchasing a smaller chain, Western Mountain Pizza. PPs analysts expect the merger to result in incremental net cash flows as follows: Y1=$1,900,000, Y2 = $2,200,000, Y3 = $3,500,000, Y4 =$5,800,000. In addition, Westerns Y4 cash flows are expected to grow at a constant rate of 4% after Y4. Westerns post merger beta is expected to be 2 and its tax rate would be 30%. The risk free rate is presently 6% and the market risk premium is 5%. What is the value of Western to Pizza Palace
2. There are three methods for valuing merger candidates. Briefly explain each of them
3. The current market shares for U.S. airlines is as follows:

Airline Market Share

Delta 16.3%

United 15.7%

Southwest 15.4%

American 12.8%

US Airways 8.4%

JetBlue 5.1%

Alaska 4.1%

If American and US Airways successfully merge. According to Justice Department merger guidelines, what type of industry would this merger result in ?