1. BigBy and McCheese are all-equity firms. BigBy has 10,000 shares outstanding at a market price of $45 a share while McCheese has 5,000 shares outstanding at a price of $32 a share. BigBy is acquiring McCheese for $167,000 in cash. The incremental value of the acquisition is $12,500. What is the net present value of acquiring McCheese to BigBy?

$7,400

$8,100

$5,500

$6,600

$6,300

2. Westford Company has a $10,000 pure discount bond that comes due in one year. The risk-free rate of return is 3 percent. The firm's assets are expected to be worth either $7,000 or $14,000 in one year. Currently, these assets are worth $11,000. What is the current value of the firm's debt?

$10,170.47

$9,812.66

$9,150.84

$8,643.27

$8,597.78