10.

AT&T and BellSouth have entered into a stock swap merger agreement whereby AT&T will pay a 40% premium over BellSouth's premerger price. Currently, BellSouth has 0.5 million shares outstanding. AT&T's premerger price per share was $15 and BellSouth's was $30. The number of new shares AT&T will need to issue to fund the deal is closest to:

a.

1.40 million shares

b.

0.70 million shares

c.

1.00 million shares

d.

0.25 million shares