PLEASE ANSWER QUESTION 10 AND PLEASE BE DETAILED!!!

9. Merger Gains and Costs. Velcro Saddles is contemplating the acquisition of Skiers' Airbags 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 mar- keting and administrative costs by $500,000 per year in perpetuity. Velcro Saddles is willing to pay $14 million cash for Skiers. The opportunity cost of capital is 8%. (L021-2) a. What is the gain from the merger? b. What is the cost of the cash offer? c. What is the NPV of the acquisition under the cash offer? 10. Stock versus Cash Offers. Suppose that instead of making a cash offer as in Problem 9, Velcro Saddles considers offering Skiers' shareholders a 50% holding in Velcro Saddles. (L021-2) a. What is the value of the stock in the merged company held by the original Skiers' shareholders? b. What is the cost of the stock alternative? c. What is the merger's NPV under the stock offer? 9. Merger Gains and Costs. Velcro Saddles is contemplating the acquisition of Skiers' Airbags 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 mar- keting and administrative costs by $500,000 per year in perpetuity. Velcro Saddles is willing to pay $14 million cash for Skiers. The opportunity cost of capital is 8%. (L021-2) a. What is the gain from the merger? b. What is the cost of the cash offer? c. What is the NPV of the acquisition under the cash offer? 10. Stock versus Cash Offers. Suppose that instead of making a cash offer as in Problem 9, Velcro Saddles considers offering Skiers' shareholders a 50% holding in Velcro Saddles. (L021-2) a. What is the value of the stock in the merged company held by the original Skiers' shareholders? b. What is the cost of the stock alternative? c. What is the merger's NPV under the stock offer