Firm a Has a Value of $150 Million and Firm

question 18

Multiple Choice

Firm A has a value of $150 million and Firm B has a value of $100 million. Merging the two would enable cost savings with a present value of $40 million. Firm A purchases Firm B for $120 million. What is the gain from this merger?

• A)$20 million
• B)$40 million
• C)$100 million
• D)$80 million