Firm A is considering a merger/acquisition with Firm B. Based on the following data, what is the maximum price per share Firm A would pay to acquire Firm B in a tender offer? 

Firm A:

Market value of debt: $1 million

Market value of equity: $6 million

Number of shares: 0.1 million

Estimated total firm value based on value-based management model: 7.2 million

Firm B:

Market value of debt: $4 million

Market value of equity: $6 million

Number of shares: 0.4 million

Estimated total firm value based on value-based management model: 12.8 million

Select one:

a. $18.5b. $22.5c. $20.9d. $21.6e. $19.3

 

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