1. Firm XYZ has the following financial information: A ROE of 10%, a payout ratio of 40%, the earnings to be paid by the end of this term is $5.00, the required return is 15%. A peer competitor in the same industry, firm ABC's CFO now is considering acquiring XYZ at a price of 25$ per share. While the CEO of ABC takes it as a ridiculous suggestion. Which side do you take? Why? (Assuming the market is efficient enough) (5 points)