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What is the maximum price per share

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Question - B has 1 million shares priced at $2 each. A plans to acquire 50 per cent of shares in B. The change in net operating cash flows expected from the takeover is $500 000 p.a. The cost of capital for A's assets is 10 per cent and 12.5 per cent for B's assets. What is the maximum price per share A should offer B in order to take it over given the aforementioned information?

A. $7 million

B. $6

C. $6.70

D. $12

Reference no: EM132164809

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