Firm X is going to acquire Firm Y$.$ The acquisition will be done via a share exchange, whereby

Firm X will exchange $1\mathrm{.}5$ of its shares for every one of Firm Y$$s shares. Synergy is $$500,000$ in

total.

Firm X $($Bidder$)$ Firm Y $($Target$)$

Shares Outstanding $600,00060,000$

Price per Share $$100$ $$150$

Earnings $1,600,0001,300,000$

$46.$ What is the takeover premium?

A$)$ $$0$

B$)$ $$64,800$

C$)$ $$500,000$

D$)$ $$2,956,800$

E$)$ $$4,435,200$

Page $14$ of $15$

$47.$ For the NPV of the transaction to be zero, how many shares would Firm X have to give to Firm

Y$?$

A$)40,000$

B$)60,000$

C$)90,000$

D$)95,000$

E$)$ None of the above