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:

Siena

$16$

Maive

$10$

Shares outstanding : siena: $1,000,000$ maive: $440,000$

Earnings: siena :$$1,500,000$ Maive:$$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.

$24.$ 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$

$25.$ 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$