Birdie Golf, Inc, has been in merger talks with Hybrid Golf Company for the past six months. After several rounds of negotiations, the offer under discussion is a cash offer of $282 million for Hybrid Golf Both companes have niche markets in the golf club industry, and the companies believe a merger will result in cignificant synergies due to economies of scale in manufacturing and marketing, is well as significant savings in general and administrative expenses. Bryce Bichon, the finencial officer for Birdie, has been instrumental in the merger negotiations. Bsyce has prepared the following pro forma financial statements for H brid Golf assuming the merger takes place. The financial statements inciude all synergatic benefits from the merger: finincing, The following table outines the required investments and vosices of fininciry: The manageneat of Birdie Golf feels that the capital structure at Hybrid Golf is not optimat. If the merger tabes place, Hybrid Golf will immediately increase its leverage with a $57 mittion debt issue, which would be followed by a $76 mithion dindend pament to Birdie Golf This will increase Hybrid's debtequity ratio from 50 to 1.00 . Birdie Golf also will be able to tae a $12.$ million tax los: carrfforward in both 2020 and 2021 from Hybrid Golf's previous operations. The total value of Hybra Golf is expected to be $460.$ million in five years, and the company will have $153.6 million in debt at that time has 52 million sharts of ttock outstanding. Both companies can borrow at an 8 percent interett rate, The nakftec fate as 6 percent, and the opected setura on the market is 13 percent. Bryce believes the current cost of capital for Birdin Golf is 11 percent. The beta for Hybrid Golf stock at its current capatal structure is 1.30 . Bryce has acked you to analyze the financial aspects of the potential merger, Specifically, he has arked you to anwer the following questions: The management of Birdie Golf feels that the capital structure at Hybrid Golf is not optimal If the merger takes place, Hybrid Golf will immediately increase its leverage with a $57 million debt issue, which would be followed by a $76 million dividend payment to Birdie Golf. This will increase Hybrid's debtequity tatio from 50 to 1.00 . Birdie Golf also will be able to use a $12.8 mithion tax loss carryforward in both 2020 and 2021 from Hybrid Golf's previous operations. The total value of Hybrid Golf is expected to be $460.8 million in five years, and the company will have $153.6 miltion in debt at that time. Stock in Burdse Golf currently sells for $94 per thare, and the company has 11.6 miltion shares of stock outstanding Hybthe Golf Pust 922 has 5.2 million shares of stock outatanding. Both companies can borrow at an 8 percent interest rate. The riskfree fate is 6 percent and the expected return on the merket is 13 petcent. Bryce believes the current cost of capitat for Birdue Coif is 11 percent. The betu for Hybend Golf stock at its current capital structure is 1.30 . Bsyce has abed you to analyze the financial aspects of the potential merser. Speciffeally; be has asked ypu to answer the following quections: 1. Suppose Hjbrid thareholders will agree to a merget price of $63.25 per share. Should Birtie procetd with the merger? 2. What is the highest price per share that Birdie should be willing to pay for Hytrid? terms equivieat to the original metyet price of 563.25 per thare? 4. What is the highest exchange ratio Birdie wostd be willing to pay and sull undertake the mesger