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2. You own a small networking startup. You have just received an offer to buy your firm from a large publicly traded firm. ICH Systems.

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2. You own a small networking startup. You have just received an offer to buy your firm from a large publicly traded firm. ICH Systems. Under the terms of the offer you will receive 1 million shares of CH ICH stock currently trades for $25 per share. You can sell the shares of C that you will receive in the market at any time. But as part of the offer. ICH also agrees that at the end of the next year, it will buy the shares back from you for $25 per share if you desire. Suppose the current one-year risk-free rate is 6.18, the volatility of JCH stock is 30%, and JCH does not pay dividends. (a) is this offer worth more than 525 million? Explain. (b) What is the value of the offer

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