Question 2 (50 marks) Owen Corporation considers acquiring Harry Computers. The financial data of the two firms are as follows. Harry Computers Owen Corporation $2.5 450,000 Earnings per share Number of outstanding shares P/E ratio Current dividend per share $2.0 150,000 10 $0.8 12 $1.0 The financial analyst expects Harry Computers' dividends to grow at a rate of 5% per year. Owen Corporation believes that the synergy from the acquisition will improve the growth to 6% per year. Required: a Assume that Owen Corporation negotiates a stock-for-stock acquisition on the basis of price per share. If Owen Corporation pays the minimum price to Harry Computers, please analyse how many shares of Owen Corporation common stock are outstanding after the acquisition. (12 marks) b Determine the NPV of the acquisition if Owen Corporation offers 1 new share of Owen Corporation for every 1 share of Harry Computers. Should Owen Corporation go ahead with the acquisition? (18 marks) c Calculate the NPV of the acquisition if Owen Corporation offers $25 cash for each outstanding share of Harry Computers. Should Owen Corporation go ahead with the acquisition? (8 marks) d Discuss the maximum price in terms of cash for the acquisition to be viable. What is the maximum price in terms of new Owen Corporation shares for the acquisition to be viable? (12 marks)