Consider the following premerger information about a bidding firm $($Firm B$)$ and a target firm $($Firm T$).$ Assume that both firms have no debt outstanding.

Firm B Firm T

Shares outstanding $4,8001,200$

Price per share $ $44$ $ $16$

Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $$8,900.$ Firm T can be acquired for $$18$ per share in cash or by exchange of stock wherein B offers one of its shares for every two of T$\text{'}$s shares.

Are the shareholders of Firm T better off with the cash offer or the stock offer?

multiple choice

Share offer is better

Cash offer is better

At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers?