HW2 (2023-Fall) - The offer for ITT-Sheraton by Hilton and Starwood Please submit a typed solution that includes all calculations, with the three names of the group members. Please read the scanned copy of Hilton's and Starwood's offers for ITT. Assume: Volatility =30% for both Hilton (HLT) and Starwood (HOT) stock returns, the riskless rate: r=8%,PHLT=31.81 (The price on 10/31:$30.81; the text on the stock valuation of $27.73 refers to this price and can be ignored), P=$52.10 (down from $54.25 on 10/31, and from $57.263 earlier). HLT and HOT are the ticket symbols of Hilton and Starwood, respectively. PHLT and PHOT are the stock prices after the transaction is announced. They incorporate the information about the value of the transaction, including the value of the expected synergy, and of the derivatives that are offered. No dividend is paid on these stocks. Assume that ITT SH vote is expected to take place 30 days from now. If Starwood's offer is supported, the deal will be completed 40 days after that and on that day, Starwood will pay for the deal. If Hilton's offer is supported, the merger will be completed in 10 days after the SH vote. Then, Hilton pays the cash and the stock + one contingent value stock against each share of Hilton. The year has 365 days. Assume for simplicity that for each bidder, the transaction is certain to go through. Use post-announcement prices. Assume no transaction costs. Calculate the value of each offer. HW2 (2023-Fall) - The offer for ITT-Sheraton by Hilton and Starwood Please submit a typed solution that includes all calculations, with the three names of the group members. Please read the scanned copy of Hilton's and Starwood's offers for ITT. Assume: Volatility =30% for both Hilton (HLT) and Starwood (HOT) stock returns, the riskless rate: r=8%,PHLT=31.81 (The price on 10/31:$30.81; the text on the stock valuation of $27.73 refers to this price and can be ignored), P=$52.10 (down from $54.25 on 10/31, and from $57.263 earlier). HLT and HOT are the ticket symbols of Hilton and Starwood, respectively. PHLT and PHOT are the stock prices after the transaction is announced. They incorporate the information about the value of the transaction, including the value of the expected synergy, and of the derivatives that are offered. No dividend is paid on these stocks. Assume that ITT SH vote is expected to take place 30 days from now. If Starwood's offer is supported, the deal will be completed 40 days after that and on that day, Starwood will pay for the deal. If Hilton's offer is supported, the merger will be completed in 10 days after the SH vote. Then, Hilton pays the cash and the stock + one contingent value stock against each share of Hilton. The year has 365 days. Assume for simplicity that for each bidder, the transaction is certain to go through. Use post-announcement prices. Assume no transaction costs. Calculate the value of each offer