3. Suppose Elgin is unwilling to pay cash for the merger but will consider a stock exchange . What exchange rate* would make the merger terms equivalent to the original merger price of $31 . 25 per share ? 4 . What is the highest exchange ratio Elgin should be willing to pay and still undertake the merger ? 2017 2018 2019 2020 2021 Sales 5360.000. 000 $405, 000.000 $450.000.000 $508. 50,0.000 $562.50,0. 000 Production costs 248,000, 000 284, 000.000 315,00,0.000 355.50,0.000 393.000, 000 Depreciation 36, 000,000 41, 000.000 45, 000, 000 51,00.0.0.00 56, 000, 000 Other expenses 23,000, 000 36,000.000 37,000,000 38.00.0.000 38.000,000 EBIT $ 43.000. 000 $ 41,000.000 $ 53.000.000 $ 64,00.0.000 $ 75. 50.0. 000 Interest 8. 500, 000 10,000.000 1 1,000, 000 11.250, 000 12.50,0,000 Taxable income $ 34.500, 000 $ 34. 000.000 $ 42.00 0. 000 5 52, 7:50.000 $ 63.00,0.000 Taxes ( 4046) 13.800, 000 13. 600.000 16.800,000 21, 100.000 25, 200, 000 Net income $ 20. 700, 000 $ 20.400,000 $ 25, 200,000 $ 31,650, 000 $ 37, 800,000 Additions to retained earnings $ 15. 400.000 $ 1 1 70 0.000 $ 11,700.000 $ 10. 8.010, 000