As treasurer of Leisure Products, Inc., you are investigating the possible acquisition of Plastitoys. You have the following basic data:

	Leisure Products	Plastitoys
Forecast earnings per share	$7	$1.60
Forecast dividend per share	$5	$.80
Number of shares	1,200,000	600,000
Stock price	$90	$20

You estimate that investors currently expect a steady growth of about 9% in Plastitoys's earnings and dividends. You believe that Leisure Products could increase Plastitoys's growth rate to 11% per year, without any additional capital investment required.

a.	What is the gain from the acquisition? (Do not round intermediate calculations.)

Gain

$

b.	What is the cost of the acquisition if Leisure Products pays $25 in cash for each share of Plastitoys? (Do not round intermediate calculations.)

Cost

$

c.	What is the cost of the acquisition if Leisure Products offers one share of Leisure Products for every three shares of Plastitoys? (Do not round intermediate calculations.)

Cost

$

d.	How would the cost of the cash offer and the share offer alter if the expected growth rate of Plastitoys were not increased by the merger?

Cash	$
Share	$