Claire Inc is considering making an offer to buy Kevin Ltd$.$ Claire$$s Vice President of finance has collected the following information:

Claire Inc.

PE Ratio: $14\mathrm{.}5$

Shares Outstanding: $1,300,000$

Earnings: $$3,900,000$

Dividends: $$950,000$

Kevin Inc

PE Ratio: $9\mathrm{.}2$

Shares Outstanding: $175,000$

Earnings: $$640,000$

Dividends: $$310,000$

Claire Inc knows that securities analysts expect the earnings and dividends of Kevin Ltd to grow at a constant rate of $5\%$ each year. Claire$$s management believes that their more sophisticated marketing expertise and economies of scale would increase Kevin Ltd$.$s growth rate to $7\%.$

QUESTIONS:

A$)$ What is the value of Kevin Ltd to Claire Inc?

B$)$ What are the synergies from this transaction?

C$)$ If Claire Inc was to offer $$38$ cash for each share of Kevin Ltd what would be the NPV of this acquisition?

D$)$ If Claire were to offer $100,000$ of its shares in exchange for all the outstanding stock of Kevin Ltd$,$ what would the NPV be$?$

E$)$ Should Claire Inc proceed to acquire Kevin Ltd$?$ If yes, should it offer cash or the share exchange $($elaborate$)?$