On the bottom of what ? Can you please take a pic of the question
Answer:
a. The shareholders will want to tender their shares.
c. The gain will be $25.31 million – $23.44 million = $1.87 million.
Explanation:
a. The value of the firm is 1.25 million shares* 15= $18.75 million.
Increase in value, 18.75*135% = $25.31 million, so now this is the value of the firm
If 50% of the shares are bought for $18.75 Million, you will buy 0.625 million shares, so the total amount that will be paid is $11.72 million.
Now, the money against shares will be borrowed as collateral. This means that the new value of the equity will be $25.31 million – $11.72 million = 13.59 million.
1.25 million shares are there so now the price of the share will be = $10.87 million ($13.59 million/$1.25 million = $ 10.87 million).
b.The price of the shares has decreased from $13.59 to $10.87 after the tender offer, everyone will want to tender their shares for $18.75.
c. Supposing everyone tenders the shares and you will buy at $18.75 per share, you will pay $23.44 (18.75 per share *1.25 million shares) to acquire the company and it will be worth $25.31 million.
The gain will be $25.31 million – $23.44 million = $1.87 million.
Answer: b. Increases, decreasing
Explanation: For most companies, the web increases the threat that new competitors will enter the market by decreasing traditional barriers to entry. Traditional barriers to entry include
a. Economies of scale
b. Product differentiation
c. Capital requirements
d. Switching costs
e. Access to distribution channels
f. Cost disadvantages
g. Government policy
thus, by reducing some of these barriers to entry the Web increases the threat of new competition.
