I have attached a file that has questions about merger and acquisition and I need the answers as soon as possible.

Third Marked Assignment Due April 25 (before the quiz starts) 1. ABC has 1 million shares outstanding, each of which has a price of $20. It has made a takeover offer of XYZ Corporation which has 1 million shares outstanding and a price per share of $2.50. Assume that the takeover will occur with certainty and all market participants know this. Furthermore, there are no synergies to merging the two firms. a. b. Assume ABC makes a stock offer with an exchange ratio of 0.15. What happens to the price of ABC and XYZ this time? What premium over the current market price does this offer represent? (0.5 points) c. 2. Assume ABC made a cash offer to purchase XYZ for $3 million. What happens to the price of ABC and XYZ on the announcement? What premium over the current market price does this offer represent? (0.5 points) At current market prices, both offers are offers to purchase XYZ for $3 million. Does that mean that your answers to parts (a) and (b) must be identical? Explain. (0.5 points) Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $40. You are thinking of buying TargetCo, which has earnings per share of $2, 1 million shares outstanding, and a price per share of $25. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. a. If you pay no premium to buy TargetCo, what will your earnings per share be after the merger? (0.5 points) 1 b. c. What explains the change in earnings per share in part (a)? Are your shareholders any better or worse off? (0.5 points) d. 3. Suppose you offer an exchange ratio such that, at current preannouncement share prices for both firms, the offer represents a 20% premium to buy TargetCo. What will your earnings per share be after the merger? (0.5 points) What will your price-earnings ratio be after the merger (if you pay no premium)? How does this compare to your P/E ratio before the merger? How does this compare to TargetCo's premerger P/E ratio? (0.5 points) The current price of the target firm is $10 per share and the price of the target firm is $20 per share if it is taken over by the raider. The raider does not hold any shares of the target firm and makes a tender offer of $16 per share to the target's existing shareholders. The target firm has 1 million shares outstanding with each shareholder holding one share. You are one of the 1 million shareholders of the target firm. The takeover succeeds if more than 50% of all shareholders tender their shares. If the takeover fails, the price of the target firm will remain at $10 per share. Should you accept the $16 per share tender offer or not? Do you expect the takeover to succeed or fail? Justify your answers. (1 point) 2 4. According to studies on effectiveness of corporate boards, which of the following is the least likely to be a good corporate board that enhances firm value? (0.25 points) A) A board with more than 20 directors who have worked in various industries. B) A board with majority independent directors. C) A board without busy directors who sit on the boards of more than three firms. D) A board whose chair person is not the firm's CEO. 5. You own 1000 apple trees. Each tree bears 10 apples. The costs of picking the 10 apples from each tree are 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10, respectively. The picking costs are the same for all the 1000 trees. The revenue from selling each apple in the market is 8. Suppose you cannot pick the apples from the tree by yourself and decide to hire some workers to do so. Which of the following compensation scheme to the workers will motivate the workers to pick up the greatest number of apples from the trees? (0.25 points) A) Pay the workers hourly wages. B) Pay the workers 3 for each apple they pick from the trees. C) Pay the workers 5 for each apple they pick from the trees. D) Sell the 10 apples ON EACH TREE to the workers for 27. 3