where is the value found for the MCI shareholders? How is an option pricing model for these stock prices made?

MCI shares (000)= Exhibit 5 326,431 Rf = In (1 + Rate in table A) 3.35% Verizon Qwest Cash component-Exhibit 7 $8.75 $10.5 Stock component-Exhibit 7 $14.75 $15.5 Current Exchange Ratio-Exhibit 7 0.4231 4.0897 Min exchange ratio-Exhibit 7 0.4062 3.392 Max exchange ratio-Exhibit 7 None 4.1444 Volatility-Implied from page 5 19% 45% Price-page 5 $34.86 $3.79 Time to completion-page 5 1 1 Div yield = In (1 + yield on page 5) 4.32% 0% Shares (000)-Exhibit 7 2,777,000 1,820,000 Offer on March 29 $23.5 $26 Bidder: Synopsis: Stock Price: Shares: Market Cap: Debt: Bidder: Synopsis: Stock Price: Shares: Market Cap: Debt: Verizon Verizon bid $23.50 per share of MCI stock, $8.75 in cash, plus $14.75 in Verizon shares. Verizon pledged to issue no fewer than 0.4062 shares of Verizon stock for each share of MCI stock. The exact exchange ratio will be determined by dividing $14.75 by the price of Verizon common stock on the trading day immediately preceding the effective time of the acquisition of MCI by Verizon and will be deemed equal to 0.4062 if the quotient is less than 0.4062. $34.86 2.77 billion $96.56 billion $39.24 billion Qwest Qwest bid $26 per share of MCI stock, $10.50 per share in cash, plus $15.50 per share in stock. The value of the stock consideration was based on a Qwest stock price of $4.15. In the event that the trading price for Qwest common stock prior to the closing of the transaction does not equal $4.15 per share. then the exchange ratio shall be adjusted as follows: . If the Qwest share price is between $3.74 and $4.14 inclusive, then the exchange ratio shall be adjusted upward to deliver value of $15.50 in stock consideration. 0 If the Qwest share price is between $4.15 and $4.57, then the exchange ratio shall be adjusted downward to deliver value of $15.50 in stock consideration. a If the Qwest share price is below $3.74. then the exchange ratio shall be 4.1444. . If the Qwest share price is above $4.57, then the exchange ratio shall be 3.392. $3.79 1.82 billion $6.89 billion $17.29 billion