Question 2. FreemanCare Inc , which maintains and runs health maintenance organizations ,has a price lbook value ratio of 4. It plans to merge with NewcombCare Inc , a corporation that owns and runs hospitals , and has a price lbook value ratio of 2. Assuming that FreemanCare's equity value is three times that of NewcombCare's equity value , and that the companies adopt pooling to account for the acquisition , estimate the price [book value ratio after the merger .(Pooling essentially earns that the book values of the two rms are added up to arrive at the book value of the combined firm) Question 3. Walgreen , a large retail drugstore chain in the United States , reported net income of $221 million in 1993 on revenues of $8298 million .It paid out 31% of its earnings as dividends , a payout ratio that is expected to remain level from 1994 to 1998 , during which period earnings growth is expected to be 13.5 %. After 1998 , earnings growth is expected to decline to 6%, and the dividend payout ratio is expected to increase to 60%. The beta is 1.15 and this figure is expected to remain unchanged . The Treasury bond rate is 7%. a. Estimate the pricelsales ratio for Walgreens, assuming its profit margin remains unchanged at 1993 levels. b. How much of this pricefsales ratio can be attributed to extraordinary growth