SIRIUS Satellite Radio and XM Satellite Radio announced the completion of their merger, which will be called SIRIUS XM Radio Inc. XM shareholders will receive shares of SIRIUS common stock for each share of XM stock. The stock price of the acquiring company, Sirius, prior to the merger announcement was approximately $3.7 per share, and SIRIUS had 1,460 million shares outstanding. XM, the target company, had a stock price around $14 and 314 million shares outstanding. Assume the value of the synergies (merger gain) was expected to be $1 billion. 1. Calculate the minimum exchange ratio that XM shareholders would be willing to accept. 2. Calculate the maximum exchange ratio that SIRIUS shareholders would be willing to accept.