As treasurer of Leisure Products, Inc., you are investigating the possible acquisition of Plastitoys. You have the following basic data:

Leisure Products Plastitoys

Earnings per share $ 4.00 $ 1.70

Dividend per share $ 2.00 $ .85

Number of shares 1,000,000 500,000

Stock price $ 85 $ 30

You estimate that investors currently expect a steady growth of about 4% in Plastitoys’ earnings and dividends. Under new management, this growth rate would be increased to 4.90% per year, without any additional capital investment required. (Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places.)

a. What is the gain from the acquisition? Gain $: million

b. What is the cost of the acquisition if Leisure Products pays $33 in cash for each share of Plastitoys? Cost : $ million

c. What is the cost of the acquisition if Leisure Products offers one share of Leisure Products for every 2.5 shares of Plastitoys? Cost $ million

d. Calculate the cost of the cash offer and the share offer if the expected growth rate of Plastitoys were not changed by the merger?

Cash offer: $ million

Share offer: $ million