1. Firm A is considering acquiring Firm T. Below is the premerger information for each firm. Both firms have no debt. Firm A (acquiring firm) Firm T (target firm) Price per share Total Dividends Number of shares outstanding $100 $20,000,000 10,000,000 $30 $3,000,000 3,000,000 Before the acquisition, dividends of Firm T are expected to grow at a constant rate of 5 percent each year forever. Firm A expects the acquisition will increase this growth rate to 6.5 percent per year because of the synergies. Ignore transaction costs for the acquisition a) Find the value of Firm T with synergies and Firm A's gain from acquisition. b) If Firm A offers $32 in cash for each share of Firm T, find the net present value (NPV) of the acquisition. c) Find the most Firm A should pay in cash per share for the stock of Firm T. d) If Firm A offers 850,000 shares of the merged firm in exchange for the outstanding stock of Firm T, compute the net present value. e) Should Firm A acquire Firm T? If yes, should Firm A acquire Firm T in cash or equity exchange? 1. Firm A is considering acquiring Firm T. Below is the premerger information for each firm. Both firms have no debt. Firm A (acquiring firm) Firm T (target firm) Price per share Total Dividends Number of shares outstanding $100 $20,000,000 10,000,000 $30 $3,000,000 3,000,000 Before the acquisition, dividends of Firm T are expected to grow at a constant rate of 5 percent each year forever. Firm A expects the acquisition will increase this growth rate to 6.5 percent per year because of the synergies. Ignore transaction costs for the acquisition a) Find the value of Firm T with synergies and Firm A's gain from acquisition. b) If Firm A offers $32 in cash for each share of Firm T, find the net present value (NPV) of the acquisition. c) Find the most Firm A should pay in cash per share for the stock of Firm T. d) If Firm A offers 850,000 shares of the merged firm in exchange for the outstanding stock of Firm T, compute the net present value. e) Should Firm A acquire Firm T? If yes, should Firm A acquire Firm T in cash or equity exchange