You work for a leveraged buyout firm and are evaluating a potential buyout of UnderWater Company.UnderWater's stock price is $22 and it has 2.25 million shares outstanding.You believe that if you buy the company and replace itsmanagement, its value will increase by 45%. You are planning on doing a leveraged buyout of UnderWater and will offer $27.50 per share for control of the company.

a. Assuming you get 50% control, what will happen to the price ofnon-tendered shares?

b. Given the answer in part (a), will shareholders tender theirshares, not tender theirshares, or beindifferent?

c. What will your gain from the transactionbe?

a. Assuming you get 50% control, what will happen to the price ofnon-tendered shares?

Share price will be $_____________. (Round to the nearestcent.)

b. Given the answer in part (a), will shareholders tender theirshares, not tender theirshares, or beindifferent?(Select the best choicebelow.)

A.

They will not want to tender their shares.

B.

They will be indifferent.

C.

They will all want to tender their shares.

Your answer is correct.

c. What will your gain from the transactionbe?

Gain will be $______________-million.(Round to two decimalplaces.)

** Please provide excel spreadsheet with fillable values for further use. Thank you!