Questions $21$ to $30$ carry $3$ points each

Use the information below to answer Questions $21$ to $25.$

Siena Inc., a large tech company, is considering making an offer to purchase Maive Inc., a smaller computer company. Both firms are all$-$equity financed. You have collected the following information on the two companies as of the end of the current year:

Price$-$earnings ratio

Shares outstanding

Earnings

Siena

$16$

$1,000,000$

$$1,500,000$

Maive

$10$

$440,000$

$$528,000$

Maive Inc. currently pays out an annual dividend of $$0\mathrm{.}80$ per share. Security analysts expect that, with its current stand$-$alone operations, Maive's annual dividends per share would grow perpetually at $5\%$ per year. However, Siena's management believes that the acquisition of Siena would open up some new growth opportunities that would result in $7\%$ perpetual annual growth of Siena's dividends per share.

$21.$ What is the post$-$acquisition value of Maive to Siena?

a$)$ $$5,280,000$

b$)$ $$7,392,000$

c$)$ $$7,532,800$

d$)$ $$7,040,000$

$22.$ What is the most Siena should be willing to pay in cash per share for the stock of Maive?

a$)$ $$15\mathrm{.}00$

b$)$ $$17\mathrm{.}12$

c$)$

$$16\mathrm{.}80$

d$)$ $$16\mathrm{.}00$

$23.$ What would be the post$-$acquisition per$-$share price of Siena if it were to acquire the outstanding stock of Maive with a shares$-$exchange ratio of $1$: $5($i$.$e$.1$ share of Siena for every $5$ shares of Maive$)?$

a$)$ $$21\mathrm{.}90$

b$)$ $$24\mathrm{.}00$

c$)$ $$26\mathrm{.}64$

d$)$ $$28\mathrm{.}98$