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Question: Space Savings Association has just received an offer to merge from Courthouse County Bank. Space's stock is currently selling for $58 per share. The shareholders of Court-house County agree to pay Space's stockholders a bonus of $10 per share. What is the merger premium in this case? If Courthouse County's shares are now trading for $85 per share, what is the exchange ratio between the equity shares of these two institutions? Suppose that Space has 10,000 shares and Courthouse County has 30,000 shares out-standing. How many shares in the merged firm will Space's shareholders wind up with after the merger? How many total shares will the merged company have outstanding?

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