Firm A is considering a merger with Firm B. Based on the following data, what is the stock exchange ratio if Firm A negotiates a merger with Firm B and if all the synergy gain goes to Firm B's shareholders?

Firm A:

Market value of debt: $2 million

Market value of equity: $4.5 million

Number of shares: 0.2 million

Estimated total firm value based on value-based management model: 8 million

Firm B:

Market value of debt: $5 million

Market value of equity: $7 million

Number of shares: 0.5 million

Estimated total firm value based on value-based management model: 13 million

Select one:

a. 2.3112, that is, 1 B share exchanges for 2.3112 A shares.b. 0.5578, that is, 1 A share exchanges for 0.5578 B shares.c. 1.1842 that is, 1 A share exchanges for 1.1842 B shares.d. 2.3112, that is, 1 A share exchanges for 2.3112 B shares.e. 1.1842, that is, 1 B share exchanges for 1.1842 A shares.f. 0.5578, that is, 1 B share exchanges for 0.5578 A shares.