Firm A wants to acquire firm T. Firm A has a market value of $85 million and 4.5 million shares outstanding. Firm T has a market value of $30 million and 1.8 million shares outstanding. Firm As CFO concludes that the combined firm with synergy will be worth $130 million, and that Firm T can be acquired at a premium of $3.1 million.

i) If firm A offers 900,000 shares of its stock in exchange for the 1.8 million shares of firm T, what will the stock price of firm A be after the acquisition?

ii) What exchange ratio between the two stocks would make the value of the stock offer equivalent to a cash offer of $33.1 million?