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Firm A is considering a merger/acquisition with Firm B. Based on the following data, what is the stock exchange ratio if Firm A negotiates a

Firm A is considering a merger/acquisition 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 A's shareholders? Firm A: Market value of debt: $4 million Market value of equity: $6 million Number of shares: 0.5 million Estimated total firm value based on value-based management model: 12 million Firm B: Market value of debt: $6 million Market value of equity: $7 million Number of shares: 0.5 million Estimated total firm value based on value-based management model: 15 million Select one: a. 2.1332, that is, 1 A share exchanges for 2.1332 B shares. b. 1.4286, that is, 1 B share exchanges for 1.4286 A shares. c. 1.4286, that is, 1 A share exchanges for 1.4286 B shares. d. 1.0156, that is, 1 A share exchanges for 1.0156 B shares. e. 2.1332, that is, 1 B share exchanges for 2.1332 A shares. f. 1.0156, that is, 1 B share exchanges for 1.0156 A shares.

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