As financial manager of Corton Inc, you are investigating a possible acquisition of Demham. You have basic data give in the following table. You estimate that investors expect a steady growth of about 6% in Denhams earning and dividends. Under new management, this growth rate would be increased to 8% per year without the need for addition capital

	Corton	Denham
Forecast earning per share	$5	$1.5
Forecast dividend per share	$3	$0.8
Number of shares	1,000,000	600,000
Stock price	90	20

1. What is the gain from the acquisition?
2. What is the cost of the acquisition oif Corton pay $25 cash for each share of Denham?
3. What is the cost of the acquisition if Corton offers one share if Corton for every three shares of Denham?
4. How would the cost of the each offer change if the expected growth rate of Corton was not changed by the merger?
5. How would the cost of the share offer change if the expected growth rate was not changed by the merge?