3) (10 points) Luck Products, Inc. is investigating the possible acquisition of YGame. You have the following basic data: Luck Products YGame Earnings per share $6,00 $2,50 Dividend per share (D1) $3,00 $ 1,50 Number of shares 1.200.000 800.000 Stock price $100 $30 You estimate that investors currently expect a steady growth of about 5% in YGame's earnings and dividends. Under new management this growth rate would be increased to 8% per year, without any additional capital investment required. a) What is the gain from the acquisition? Suppose that Luck Products pays $40 in cash for each share of YGame. b) What is the gain for Luck Products shareholders? c) What is the gain for YGame shareholders? Now suppose that Luck Products offers one share of Luck Products for every four shares of YGame. d) What is the gain for Luck Products shareholders? e) What is the gain for YGame shareholders? 3) (10 points) Luck Products, Inc. is investigating the possible acquisition of YGame. You have the following basic data: Luck Products YGame Earnings per share $6,00 $2,50 Dividend per share (D1) $3,00 $ 1,50 Number of shares 1.200.000 800.000 Stock price $100 $30 You estimate that investors currently expect a steady growth of about 5% in YGame's earnings and dividends. Under new management this growth rate would be increased to 8% per year, without any additional capital investment required. a) What is the gain from the acquisition? Suppose that Luck Products pays $40 in cash for each share of YGame. b) What is the gain for Luck Products shareholders? c) What is the gain for YGame shareholders? Now suppose that Luck Products offers one share of Luck Products for every four shares of YGame. d) What is the gain for Luck Products shareholders? e) What is the gain for YGame shareholders