Company x is considering a merger with Company y . The intention is to replace company y's current management and re-organise its main factory to focus on fewer lines of product which company x has competitive advantages in distribution. It is expected that the merged company will be able to grow at a faster rate after the deal. The table below summarizes the key information about the two companies:

	COMPANY X	cOMPANY Y
Number of shares outstanding (million)	10	5
Price ( per share)	36	8
Expected next year's dividend ( per share)	3.6	2
Expected dividend growth rate (without merger)	3%	5%
Expected dividend growth rate (if merged together)	8%	8%

Required:

A. Estimate the gain of the transaction.

B. Calculate the cost of the transaction if cOMPANY X pays 14 for each cOMPANY Ys share.

C. Calculate the cost if COMPANY X exchanges one of its share for every four shares of COMPANY y