earnings. Under new management, this growth rate would increase to 8% per year, without any additional investment required. Required (a) What is the overall gain from this acquisition? (5 marks) (b) What is the cost of this acquisition if ABC pays $25 in cash for each share in XYZ? (2 marks) (c) What is the cost of this acquisition if ABC offers one share of ABC for every four shares of XYZ? (5 marks) (d) What would be the net gain in part (b) and the net cost in part (c)? (4 marks) (e) Suppose ABC issues f20 millions of risk-free debt to finance the acquisition. What is the total gain from this acquisition? Assume that the risk-free rate is 5% and ABC is subject to a corporate tax rate of 30%. (4 marks)