It is the morning of January 2. ATR Co has agreed to purchase 100% of 20 million outstanding shares of XAY Inc for a co

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It is the morning of January 2. ATR Co has agreed to
purchase 100% of 20 million outstanding shares of XAY Inc for a
combination of $7.7 in cash and three of its own shares for every
XAY share. Immediately after the announcement, the XAY stock
is trading at $32.7 per share, while the ATR stock is trading at
$9.3 per share. The deal will close on July 2 - which is six months
later. You have put together a merger arbitrage strategy
where you purchase 9,010 XAY's shares at the current price, hedging
out the ATR stock price risk, and hold them till the deal is closed
– using maximum buying power. Assume that the ATR stock is
trading at $7.2 when the deal closes. Your account's
beginning equity is $300,000. Margin requirements are 50% on
both sides. Ignore any interest, trading commissions, and
borrow fees. How much total cash balance will you have in
your account on January 2 after putting on all the trades?
Consider all cash balance regardless of the purpose.
Question 13 options:
$373,761
$383,862
$393,964
$404,066
$414,167