Ridgetown News Inc. is considering making an offer to purchase Orford Publications. The vice president of finance has collected the following information:

	Ridgetown			Orford
Price/earnings ratio		15.5			8.8
Shares outstanding		1,300,000			170,000
Earnings	$	4,400,000		$	670,000
Dividends	$	940,000		$	390,000

Ridgetown also knows that securities analysts expect the earnings and dividends of Orford to grow at a constant rate of 6 percent each year. Ridgetown management believes that the acquisition of Orford will provide the firm with some economies of scale that will increase this growth rate to 8% per year.

a. What is the value of Orford to Ridgetown? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

b. What would Ridgetown's gain be from this acquisition? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

c. If Ridgetown were to offer $38 in cash for each share of Orford, what would the NPV of the acquisition be? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

d. What's the most Ridgetown should be willing to pay in cash per share for the stock of Orford? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

e. If Ridgetown were to offer 78,000 of its shares in exchange for the outstanding stock of Orford, what would the NPV be? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

Ridgetowns outside financial consultants think that the 8% growth rate is too optimistic and a 7% rate is more realistic.

F. What is the value of Orford to Ridgetown? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

G. What would Ridgetowns gain be from this acquisition? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

H. If Ridgetown were to offer $38 in cash for each share of Orford, what would the NPV of the acquisition be? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

I. Whats the most Ridgetown should be willing to pay in cash per share for the stock of Orford? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

j. If Ridgetown were to offer 78,000 of its shares in exchange for the outstanding stock of Orford, what would the NPV be? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)