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Question 12 (9 points) As the financial manager of Big Y, you are investigating the possibility of acquiring Price Chopper. You have the following data

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Question 12 (9 points) As the financial manager of Big Y, you are investigating the possibility of acquiring Price Chopper. You have the following data about both companies: Big Y (A) Price Chopper (B) Earnings per share $ 5 $ 1.5 Dividend per share $3 $ 0.8 Number of shares 1 million 0.6 million Stock price $90 $20 You estimate that investors currently expect a steady growth of about 6% for Price Chopper's earnings and dividends. Under the new management, this growth rate would increase to 8% per year, without any additional capital investment required. a) What is the financial gain from the acquisition? b) What is the cost of the acquisition if Big Y pays $25 in cash for each share of Price Chopper

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