PARTI - CONCEPTUAL QUESTIONS (21/30) Case Corp in considering acquiring Western Tech. Their current stock price, number of shares outstanding and balance sheets are below: Assets Debt $2 million $7 million Equity $5 million (200,000 shares at $25 each) Assets $60 million Debt $10 million Equity $50 million (IM shares at $50 each) Case Corp (pre-deal) Western Tech Case Corp closing price: $50 Western Tech closing price: $25 Shares outstanding: 1,000,000 outstanding: 200,000 Shares Suppose that Case Corp will announce the acquisition tomorrow, but is still unsure on how to finance the deal. Analyze the three scenarios below: 1) An all cash deal for a target price of $32. New debt will be issued in order to finance this entire deal. Calculate the following: a) What is the premium offered for the stock? (1 pts) b) How much will it cost Case Corp to finance this deal? (1 pts) c) Calculate Case Corp's current leverage ratio (pre-deal) and its leverage ratio after acquiring Western Tech. Keep in mind that new debt was issued in order to finance the deal. Use the formula: Leverage Ratio = Debt/(Debt + Equity). (2 pts) d) After the acquisition and based on the discussions we had in lecture 1, how does Case Corp's leverage ratio compare to the leverage ratio of an average US firm? (1 pts)