Brown company is considering the acquisition of Fox Company which generates cash flows of P4 million per year. All other being consistent and the return on equity is 16%:

a. How much is the maximum that Brown Company be willing to pay Fox Company if it will consider an indefinite 6% growth in Foxs cash flows after the third year?

b. Based on your answer in part a, what is the per share price if Fox Company has 150,000 shares of common stock outstanding?

c. Consider your answer in part a, assume that Brown Company intends to pay for the acquisition with its own stock, which is currently selling at P18 per share. How many shares must be offered for each share of the targets stock?