Firm A wants to acquire Firm B and the financial details of the firms are-
| A | B | |
| Market Price per share | Rs. 50 | Rs. 20 |
| Number of shares | 1,000,000 | 500,000 |
| Market value of the firm | Rs. 50 million | Rs. 10 million |
If the merger is expected to bring gains which have a present value of Rs. 10 million and Firm A offers one share for every two shares of Firm B to the shareholders of Firm B, the apparent cost of acquiring firm B is
1
Rs. 3,500,000
2
Rs. 5,000,000
3
Rs. 7,692,516
4
Rs. 2,500,000