1-Considering the follow premerger information about a bidding firm (Firm B)and a target firm (Firm T). Assume that both firms have no debt outstanding.

--------------------------------------Firm B -----------Firm T

Shares outstanding-----------5,400------------1,300

Price per share------------------ $ 53--------------$ 23

A firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $7,900. Firm T can be acquired for $25 per share in cash or by exchange of stock wherein B offers one of its shares for every two of T's shares.

Throughout such exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers?

Exchange ratio_____to 1