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
Novosadov [1.4K]
3 years ago
11

Firm Yahoo has attracted the attention of Firm Verizon because of its poor operating performance. Firm Verizon believes that the

way Firm Yahoo is managed is inefficient and that replacing the current management team would increase the cash flow of Yahoo by $25,000 every year up to perpetuity. Firm Yahoo has 50,000 shares outstanding and is not listed. Firm Verizon has 250,000 shares outstanding that are currently trading at $40/share. Firm Verizon already owns a 1% stake in Firm Yahoo. Firm Yahoo has two other shareholders, ABC and DEF. Both of them hold a 49.5% stake in Firm Yahoo. To change the management team, Firm Verizon needs to get control of Firm Yahoo (i.e., at least 50% of shares). Firm Verizon hires Levan Brothers, a prestigious investment bank, to get advice on the transaction. Levan Brothers estimates that the value of one share of Firm Yahoo under the current management team is $15 per share. They also advise Firm Verizon to pay a premium for the acquisition of Yahoo and to offer ABC and DEF $17 in cash for every share of Firm Yahoo. Fees charged by Levan Brothers to Firm Verizon are $6,000. Assume that there are no taxes and markets are perfectly efficient. The appropriate annual discount rate is 10%. (Note that Investment bankers usually receive a success fee, i.e., they are paid only if the transaction takes place i.e. their fees are NOT a sunk cost and the fee is typically paid by the acquiring firm.)
a) Compute the maximum price per share that Firm Verizon is willing to pay to acquire the remaining 99% of Firm Yahoo via an all-cash offer.

b) Compute ABC’s gains if it accepts the all-cash offer of $17/share.

c) ABC believes that DEF will accept the offer and tender its shares. What is the optimal strategy for ABC: accept the offer or decline the offer? Show your answer.

d) What will happen if DEF also believes that ABC will tender its shares? What is the minimum share price Firm Verizon should offer to ABC and/or DEF to avoid that?

e) Compute the gains or losses per share for Firm Verizon if an all-cash offer to acquire 99% of Firm Yahoo is made at a price of $20.

f) Under the assumption that ABC always believes that DEF will accept the cash offer (and vice versa), what is the likelihood that the inefficient management team is replaced some day? Explain.
Business
1 answer:
hichkok12 [17]3 years ago
7 0

Answer:

The answer is D

Explanation:

You might be interested in
A proper greeting is essential to which part of the sales process?
Allushta [10]
I’m not sure but maybe c
3 0
3 years ago
Each of the following statements describes how the political and legal environment encourages productivity EXCEPT: A. Well-defin
natita [175]

Answer:

C. Price changes in markets provide suppliers incentives to supply goods to markets.

Explanation:

Price changes in the market has two perspective,

  • increase in price, will increase the productivity for retailers,
  • decrease in price, will decrease the productivity for retailers.

With increase the retailers expect to earn more, and with decrease the retailers expect to earn less.

This is a normal market condition and scenario, this does not link to any kind of political or legal environment, although the change in price might be due to political or legal policies, but the increase or decrease in productivity, is not related to any political or legal influence.

6 0
3 years ago
An office building is which type of resource?
MakcuM [25]
It would be an informative resource
4 0
3 years ago
Read 2 more answers
Maizie files a suit against NuProducts, Inc. NuProducts responds that even if Maizie's statement of the facts is true, according
ycow [4]

Answer: 3. a motion to dismiss.

Explanation:

When a party believes that a case has no legal basis, in other words the party does not believe that what they did warrants a court case, they would file a motion to dismiss so as not to waste resources fighting something they see as frivolous.

In this case, NuProducts is essentially filing a motion to dismiss when they say that they did nothing wrong according to the law. They would prefer if the courts simply dismissed the case so that they would not incur costs to fight the case.

4 0
3 years ago
A senator from a state with several steel-rod factories explains that it is necessary to impose trade restrictions, such as a ta
Sergio [31]

Answer:

Jobs argument

Explanation:

-The national-security argument states that some industries have to be protected by imposing tariffs to maintain the local production in case of a war.

-The unfair-competition argument says that the domestic market has to be protected when there is unfair competition because companies from other countries are subject to different regulations.

-Using-protection-as-a-bargaining-chip argument states that the threat of imposing a restriction can help to eliminate a restriction that was imposed by another country.

-Infant-industry argument says that new industries have to be protected because they don't have economies of scales that their competitors from others countries have.

-The jobs argument claims that the trade with other countries eliminates the local jobs.

According to this, the answer is that the senator is using the jobs argument to argue for the trade restriction on steel rods because he claims that it is necessary to impose those restrictions to protect the workers from losing their jobs.

8 0
3 years ago
Other questions:
  • The following balances come from the financial statements of Way Industries: Sales revenue $850,000; Accounts receivable $280,00
    7·1 answer
  • When working with compressed air what psi should you reduce to if using the compressed air for cleaning?
    7·2 answers
  • What factors have led to a Growth of Global Trade?
    9·1 answer
  • Initially, when a firm hires a fourth worker, its wage rate goes from $80 a worker to $90. The marginal revenue product of the f
    10·1 answer
  • Please help me. ...​
    7·1 answer
  • Jake is the maker of a $2,000 promissory note payable to Kim. Kim indorses the note toLou who, in turn, indorses it to Mona, who
    14·1 answer
  • By selling shares of ownership in their company, California Scientific acquires the funds needed to finance their research and d
    15·1 answer
  • Braxton's Cleaning Company stock is selling for $33.25 per share based on a required return of 11.7 percent. What is the the nex
    9·1 answer
  • When the fed sells treasury bonds on the open market, it will tend to?
    5·1 answer
  • assume that in the short run a firm is producing 800 units of output, has average total costs of $150, and has cost of $100. the
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!