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IRISSAK [1]
3 years ago
10

Consider the following pre-merger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms h

ave no debt outstanding. Firm B Firm T Shares Outstanding 8,700 3,600 Price per Share $47 $19 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $16,700. If Firm T is willing to be acquired for $21 per share in cash, what will be the price per share for the merged firm? $47 $46.29 $48.09 $19
Business
1 answer:
anastassius [24]3 years ago
4 0

The share price for the merged firm is $48.09. Therefore, the correct option is C

<u>Explanation:</u>

(a)-Net Present Value (NPV)

Net Present Value (NPV) = Market Value of the Target Firm + synergistic benefit – Acquisition Value

= [3600 Shares multiply $19] plus $16700 minus [3600 Shares multiply $21]

= $68400 plus 16700 minus 75600

= $9500

“Net Present Value (NPV) = $9500  

(b) Share Price

Share price = [Market Value of the Bidding firm + NPV] / Number of shares of the Bidding firm

= [( 8700Shares multiply $47) plus $9500] / 8700 Shares

= [$408900 + 9500] / 8700 Shares

= $48.09 per share

“Share Price = $48.09 per share”

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3 0
3 years ago
On January 1, Andrea reviews her investment portfolio and finds out that she has had a very profitable year. To offset some of h
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$5,000 realized, but not recognized loss

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8 0
3 years ago
The Kelsh Company has two divisions--North and South. The divisions have the following revenues and expenses: Total North South
gizmo_the_mogwai [7]

Answer:

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where

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Therefore, it will result in loss of $140,000

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4 0
4 years ago
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xxMikexx [17]

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7 0
3 years ago
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Yes

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