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Company X has 1 . 5 million shares outstanding, each priced at $ 3 0 . It offers to acquire Company Y , which has

Company X has

1.5

million shares outstanding, each priced at $

30 .

It offers to acquire Company Y

,

which has

1

million shares outstanding at $

5

per share, for $

7

million in cash.

Assume Company X offers to acquire Company Y with a stock exchange ratio of

0.2 .

What premium does this offer represent?

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