1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Nonamiya [84]
3 years ago
10

Fly-By-Night Couriers is analyzing the possible acquisition of Flash-in-the-Pan Restaurants. Neither firm has debt. The forecast

s of Fly-By-Night show that the purchase would increase its annual aftertax cash flow by $370,000 indefinitely. The current market value of Flash-in-the-Pan is $9 million. The current market value of Fly-By-Night is $23 million. The appropriate discount rate for the incremental cash flows is 8 percent. Fly-By-Night is trying to decide whether it should offer 35 percent of its stock or $13 million in cash to Flash-in-the-Pan.
a. What is the synergy from the merger?
b. What is the value of Flash-in-the-Pan to Fly-By-Night?
c. What is the cost to Fly-By-Night of each alternative?
d. What is the NPV to Fly-By-Night of each alternative?
e. Which alternative should Fly-By-Night use?
Business
1 answer:
neonofarm [45]3 years ago
6 0

Answer:

Explanation:

a. The synergy will be the present value of the incremental cash flows of the proposed purchase.      

Since the cash flows are perpetual, this amount is $370,000/.08      

=$370000/.08        

=$4,625,000

b        

The value of Flash-in-the-Pan to Fly-by-Night is the synergy plus the current market value of Flash-in-the-Pan      

= $4625000+9000000          

=$13625000

c

stocked acquired = percentage age of ownership x value of merged firm

0.35 (13625000 + 23000000)

= $12818750

d

NPVs = Value of Flash-in-the-Pan to Fly-by-Night – (equivalent) cash offer =synergy – cost:    

NPV of cash alternative = 13625000 – 13000000 = $625,000

NPV of stock alternative = 13625000 - 12818750 = $806,250

e

Use the Stock Alternative, Because NPV is better

You might be interested in
Which of the following is the best description of
olganol [36]

Answer:

D. Changing practices superficially to appear more  environmentally friendly to consumers than they  truly are.

Explanation:

Greenwashing is the act of corporate companies in their attempts to convey a false impression to their customers that their products are environmentally friendly. Through this process, they provide misleading information.

Companies provide misleading information to their customers, in making the impression that their products are more environmentally friendly than other products. Thus, <u>greenwashing can be described as changing the practices of the company/ brand superficially so that they appear more environmentally friendly than they really are to customers</u>.

4 0
3 years ago
Suppose that you are the vice president of operations of a manufacturing firm that sells an industrial lubricant in a competitiv
gladu [14]

Answer:

400

Explanation:

Qd = 45 - 2P

Qd    = -15 + P

45 - 2P = P - 15

60 = 3P

60/3 = P = 20

Q = 45 - 2*20 = 5

Q = -15+20 = 5

The quantity will be 5 and price 20

<u>Now we will caclulate the consumer surplus:</u>

Which the area of the demand curve above the equilibrium.

We calculate he area of a triangle:

base x high / 2

\frac{(45-5)\times20}{2}

consumer surplus = 400

7 0
3 years ago
In one of the case studies in the textbook, Ernie Phillips was a CPA who had fallen on hard times both financially and personall
olga_2 [115]

Answer:

The fraud was discovered Option D: The operations manager found a check made payable to Phillips while searching Phillips' desk for some accounting records.

Explanation:

In the given case study, Ernie Phillips had got a job as a 'controller'. He had started writing checks to himself other than the payroll checks.

This fraud can be discovered when the operations manager found a check on Phillips desk which was payable to himself and it was other than the payroll check. Thus, Option D is the statement as an answer.

Cancelled checks do not have to do anything with the fraud, as per Option A, because cancelled checks are never cleared in the bank. The receiver doesn't usually receive a call before check clearance. So, Option B is also incorrect. No error was there in the check as stated in Option C.

8 0
3 years ago
Alex doesn't care about where he lives, but he does care about what he eats. Alex spends all his money on restaurant meals at ei
Levart [38]

Answer:

Part 1). Yes, Alex be better off in Paris if the relative prices between American and French meals (p_a/p_f) are lower in Paris than Austin because his capability to buying goods growths so his cash is fundamentally value more locally.

Part 2) No, Alex be better off in Paris if the relative prices between American and French meals (p_a/p_f) are higher in Paris than Austin because even though he can buying the same components, they will cost extra, and he will consume less goods than living in Austin

5 0
3 years ago
Which of the following is most likely to be a constraint to implementing your suggested solution?A. Sales reps who are unwilling
pentagon [3]

<u>Explanation</u>:

       i. Limited cash on hand to make changes

              It is apparent from the case that the company is experiencing a drop in the sales from the past 5 years and thus, the financial reserves will be a constraint in the accomplishment of the idea.

       ii. Costumers purchase lifestyle products from people who they know and who have expertise

It is the idea that the director of the company mark always encourages direct interaction with the clients and personal selling rather than retail or online sales considering personal relation makes exposure to the experts and their advice.

      iii. Meet with mark, your direct supervisor, about how to establish your credibility with the owner

Being a newbie to the company, it is a wise option to follow the instructions of the reporting authority to establish rapport with the owner of the organization.

      iv. Sales have declined because customers have lower disposable income

It is also evident from the case of the financial crisis and recession in going in the market due to which the customer has a lower income to make purchases.

       v. Suggesting techniques to help our sales reps become more trusted advisors

It is the time to perform a forward step by the sales reps to take the role of the advisors i.e. trusted ones for the customer in recommending the best of all.  

6 0
3 years ago
Other questions:
  • Phillips Corporation purchased 1,000,000 shares of Martin Corporation's common stock, which constitutes 10% of Martin's voting s
    7·1 answer
  • Which job would require a license or certification? ambassador lobbyist high school teacher state senator
    13·2 answers
  • What is axiom of power
    8·1 answer
  • On January 1, 2019, Broker Corp. issued $3,700,000 par value 10%, 12-year bonds which pay interest each December 31. If the mark
    12·1 answer
  • Company X got a loan of e4,000,000. The company agreed repay this loan as follows: a first payment of e2,400,000 one year from n
    10·1 answer
  • The decisions concerning an organization's goals and future plans are called a. tactical decisions. b. strategic decisions. c. o
    9·1 answer
  • Risk vs reward sim
    13·1 answer
  • If Karla spent $200 on Wednesday to have the windows in her building washed, recorded the
    7·1 answer
  • RainMan Inc. is in the business of producing rain upon request. They must decide between two investment projects: a new airplane
    12·1 answer
  • Samantha is a single mother raising two young children. In 2015, she was let go from her assembly line job at the car plant wher
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!