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Thunderbolt corporation (TBT) announced plans to acquire the Elektron corporation (ELK). TBTs stock is trading at $40 per share, while ELKs stock is trading at

Thunderbolt corporation (TBT) announced plans to acquire the Elektron corporation (ELK). TBTs stock is trading at $40 per share, while ELKs stock is trading at $20 per share, implying a pre-merger value for ELK of $4 billion. If the projected synergies S for TBTs acquisition of ELK amount to $8 billion, what is the maximum exchange ratio x (in terms of shares of TBT for shares of ELK) that TBT would offer in a stock swap and still generate a positive NPV?

a.

1.50

b.

0.75

c.

0.25

d.

1.00

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