Question 3 Ornastel Berhad (OB) is investigating a possible merger with Riverview Berhad (RB). Here are the basic financial data for the two companies: Ornastel Berhad Riverview Berhad $6.00 $8.80 Earnings per share Dividends per share Number of shares Current stock price $3.60 10 million $60 - $5.28 5.5 million $85- Both OB and RB are mature firms with no debt that enjoy the same constant growth rate every year. OB's finance director believes that post-merger cost savings could generate a one-time 15% increase in the two firms' combined value. Growth rate will remain the same after merger. a) Calculate the expected synergy from the merger.d (6 marks) b) Calculate the cost of the acquisition if OB borrows $650 million and pays this amount in cash for RB. (8 marks) c) Suppose that OB offers 1.65 OB shares for each RB share. Calculate the merger cost in this case. (8 marks) d) Discuss whether cash or stock financing is a better option for OB in the above merger