What would be the true annual return if:

bidder share price:$15/share

exchange ratio1.8

target share price$20 per share

time lapse between announcement and closing date4 months

dividend paid to target$ 1.5 per share

dividend paid to bidder$ 1.0 per share

interest rate to target for short selling6%

financing used for arbitrage strategy60% debt at 8% interest rate and 40% equity

Your true annual return if you decide to play the arbitrage game is:

a150%

b260%

c210%

d180%

e230%