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  3. 1.3 consider the following premerger information

1.3 Consider the following premerger information about a bidding firm (Firm B) and a...

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Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T 1,500 5,600 Shares outstanding Price per share $ 54 $ 24 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,000. Firm T can be acquired for $26 per share in cash or by exchange of stock wherein B offers one of its share for every two of T's share. a. Are the shareholders of Firm T better off with the cash offer or the stock offer? b. At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) a. Shareholders of Firm T b. Exchange ratio to 1

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