Case Corp in considering acquiring Western Tech. Their current stock price, number of shares outstanding and balance sheets are below:

Assets $7 million	Debt $2 million
	Equity $5 million (200,000 shares at $25 each)

Assets $60 million	Debt $10 million
	Equity $50 million (1M shares at $50 each)

Case Corp (pre-deal) Western Tech

Case Corp closing price: $50 Western Tech closing price: $25 Shares outstanding: 1,000,000 Shares outstanding: 200,000

Suppose that Case Corp will announce the acquisition tomorrow, but is still unsure on how to finance the deal. Analyze the three scenarios below:

A 25% cash and 75% stock deal for a target price of $30.50. New debt will be issued to finance the 25% cash portion. Calculate the following:

1. How much will it cost Case Corp to finance this deal (buying all outstanding shares)? (1 pts)
2. What is the exchange ratio? (1 pts)
3. If you were a Western Tech shareholder and owned 25 shares, how many shares of Case Corp will you receive and how much will you receive in cash? (1 pts)
4. How many shares will Case Corp have to issue in order to finance this deal? (1 pts)
5. Calculate Case Corps leverage ratio after acquiring Western Tech. Keep in mind that Case Corp issued both new equity and new debt to finance this deal. (1 pts)
6. Western Tech shareholders will now own shares of Case Corp. What percentage of ownership will Western Techs shareholders have over Case Corp? (1 pts)
7. Which of the three deal structures would you recommend? Consider the current and proposed capital structures, ownership dilution and cost of financial distress of all options when making your recommendation. (2 pts)