ABC has 1 million shares outstanding, each of which has a price of $25. It has made a takeover offer of XYZ Corporation which has 1 million shares outstanding, and a price per share of $2.74. Assume that the takeover will occur with certainty and all market participants know this. Furthermore, there are no synergies to merging the two firms.

A) Assume ABC made a cash offer to purchase XYZ for $4.75 million. What happens to the price of ABC and XYZ on the announcement?

The price of XYZ is on the announcement is $? per share. (Round to the nearest cent.)

The premium over the current market price is? %.(Round to the nearest two decimal places.)

The price of ABC on the announcement is $? per share. (Round to the nearest cent.)

B) Assume ABC makes a stock offer with an exchange ratio of 0.19. What happens to the price of ABC and XYZ this time?

The price of ABC is $? per share. (Round to the nearest cent.)

The price of XYZ is $? per share. (Round to the nearest cent.)

The premium over the current market price will be ? %. (Round to the nearest decimal place.)