(b) Consider the following premerger information about a bidding firm (King Berhad) and a target firm (Kong Berhad). Assume that both firms have no debt outstanding Shares outstanding Price per share King Kong 4,800 1,200 $36 $24 King Berhad has estimated that the value of the synergistic benefits from acquiring Kong Berhad is $9,500. Kong Berhad is willing to be acquired for $30 per share in cash. If Kong Berhad is agreeable to a merger by an exchange of stock and King offers four of its shares for every five of Kong's shares. (i) Are the shareholders of Kong better off with the cash offer or the stock offer? (2 marks) At what exchange ratio of King shares to Kong shares would the shareholders in Kong be indifferent between the cash offer and stock offer? (8 marks) (iii) Based on the part (ii), calculate the stock price of King after the acquisition (2 marks) (iv) Compute total shares outstanding after the merger, if Kong Berhad accepts the stock offer. (3 marks) [Total: 30 marks]