Please show work Nuvo has market value of 380 while Santek h

Please show work

Nuvo has market value of $380 while Santek has a market value of $530. Santek is merging with Nuvo and expects the combined firm to have a market value of $950. If the current Nuvo shareholders obtain $400 of equity in the new firm, how much synergy was allocated to the Santek shareholders?

$0

$32

$50

$46

$20

Solution

Total synergy:

= Total market value – Independent market value of Nuvo - Independent market value of Santek

= $950-$380-$530

= $40

Synergy was allocated to the Santek shareholders:

= $40-($400-$380)

= $20

Hence, correct option is $20