QUESTION 5: Markham Equities Limited (MEL) is evaluating four possible targets, which have the following financial data: PV of incremental cash flows B C D (synergy) $6,000,000 $4,500,000 $4,000,000 $8,000,000 Shares of common stock outstanding 300,000 Price per share $70 400,000 $40 250,000 600,000 Expected Earnings $2,000,000 $1,500,000 $80 $2,250,000 $55 $3,000,000 MEL presently has 1,000,000 shares outstanding, its stock price is $50, and its expected earnings are $5,000,000 without any merger. Assume that the target firms have no debt and each of the target firm can be acquired at a merger premium of 25% a. Calculate the NPV of the four proposed mergers. Are any of the mergers infeasible? b. Assuming acquisition through stock. Determine the post-merger EPS for the feasible merger candidates. c. If only one merger can be undertaken, which one is it? Why?