please answer both question with step to step calculations. THA

CBA Ltd has just announced a plan to acquire XYZ Ltd. Both CBA and XYZ have no debt in their capital structure. Just before the takeover announcement, the two companies have the following information:

CBA XYZ Earnings per share (EPS) ($) 1 2 Price per share ($) 20 15 Number of shares (in millions) 2 1 Assume that CBA uses a better valuation method and estimates that the net present value of the economic benefits from combining the two companies is $200,000. (i) Suppose that CBA is considering whether it should pay for XYZ by stock payment or by cash payment. Explain which method of payment CBA should use. [2 marks] (ii) Suppose that now CBA wants to achieve an EPS of $1.20 in the combined company after the takeover. CBA decides to pay for XYZ through stock payment. Calculate the exchange ratio for CBA. [2 marks]