Big Mac is considering to acquire Small Pan. Analyst projects that the merger will result the following incremental cash flows (amounts in millions):

Year	1	2	3
Earnings Before Tax	3	5	7

Additional information:

a. The corporations tax rate is 40%.

b. Small Pans cash flows are expected to grow at a constant rate of 5% after year 4 indefinitely and its post-merger beta is estimated to be 1.2, the risk-free rate is 6%, and the market risk premium is 4%.

c. Current selling price for Big Mac and Small Pan is P105 and P52, respectively.

d. Small Pan has an outstanding shares of 100,000.

Required:

a. Calculate the offer price if the acquisition is for cash.

b. How many shares of Big Mac will be issued if it will be an acquisition by exchanging shares.