Consider the Following Premerger Information About a Bidding Firm (Buyitall

Multiple Choice

Consider the following premerger information about a bidding firm (Buyitall Inc. ) and a target firm (Tarjay Corp. ) .Assume that neither firm has any debt outstanding.Buyitall has estimated that the present value of any enhancements that Buyitall expects from acquiring Tarjay is $2,600.What is the NPV of the merger assuming that Tarjay is willing to be acquired for $28 per share in cash?
$\begin{array}{c}\begin{array}{lll}\\\text { Shares outstanding}\\\text { Price per share}\\ \hline\end{array}\begin{array}{lll}\text { Buyitall}\\ \hline 1,500\\ \$ 32 \\ \hline\end{array}\begin{array}{lll}\text {Tarjay}\\\hline1,100\\ \$ 26 \\\hline\end{array}\end{array}$

A) $400
B) $600
C) $1,800
D) $2,200
E) $2,600