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
If a firm's projects differ in risk, then one way of handling this problem is to evaluate each project with the appropriate risk
zhuklara [117]

Answer:

True

Explanation:

the discount rate used for a project should reflect the risk of the project so as to make accurate predictions. if the discount rate used for a project is the same as that of the firm and the risks of the project differs, the predictions made with this project would be inaccurate. the risk adjusted discount rate has to be calculated.

7 0
3 years ago
Ingvar Kamprad’s influence over IKEA may have even been stronger than that of Sam Walton over Walmart because IKEA is a privatel
julia-pushkina [17]

Answer:

There are similarities in the way businesses are run, but the management and influencing capacity on both are completely different.

Though during the founding days both the organizations, IKEA and Walmart operated under direct influence of the founders.

Also,  power and responsibility is more shared, though there would be some adaptation and conflict changes that is expected, but it is differently structured than Walmart and would not suffer much.

Explanation:

Solution:

Now,

There are similarities in the way businesses are run, but the management and influencing capacity on both are completely different.

Though during the founding days both the organizations, IKEA and Walmart operated under direct influence of the founders.

Where as Walmart still had a lot of key decisions directly made through the founders,

  • Key global expansion
  • Key local management

Everything was micro managed from the HQ through Sam.

But after the few years of success, the model of IKEA remained same but they went to several countries and became more regional.

Global decisions were made from The HQ under the direct supervision of Ingvar  But all the key regional war was given to a CEO, who had all the decisions to make.

This way there was a lot of power sharing and responsibility distributed. In case of any problem, HQ has interruptions to make it correct.

This implies power and responsibility is more shared, though there would be some issues and adaptation changes that is expected, but it is differently structured than Walmart and would not suffer that much.

Therefore, No the effect would not be similar to that of Walmart leadership transition.

7 0
3 years ago
. Archie can claim total deductible medical expenses that exceed 7.5% of his adjusted gross income. a. True b. False
Thepotemich [5.8K]

The correct answer is; False, as of 2020.

Further Explanation:

In the previous tax years, 2017-2018, this statement would of been correct. Archie could of claimed his total deductible medical expenses that exceeded 7.5% of his AGI. However, the laws changed for 2019 and this is no longer the correct way to claim medical expenses.

For the 2019 taxes, a person can only deduct any expenses that amount to over 10% of the total AGI per person. The deduction can be figured by taking your AGI and multiplying this total by 10%. The deductions will also have to be itemized before claiming.

Learn more about medical deductibles at brainly.com/question/1845375

#LearnwithBrainly

3 0
3 years ago
Trevor is a marketing professional in a small firm. He wants to promote his firm’s online shopping website. He targets only thos
MrRissso [65]
D ?
Inn bound marketing
3 0
3 years ago
Read 2 more answers
Your savings account is currently worth $1,200. The account pays 5 percent interest compounded annually. How much will your acco
Flura [38]

Answer:

$2,010  

Explanation:

The future value of the savings account in 6 years can be computed using the below future value formula:

FV=PV*(1+r)^n

FV=unknown future amount

PV=current worth of the savings account=$1,200

r=annual interest rate=5%

n=number of years envisaged=6

FV=$1,500*(1+5%)^6

FV=$1,500*(1.05)^6

FV=$1,500*1.3400956  

FV=$2,010  

7 0
3 years ago
Other questions:
  • (1 point)
    5·1 answer
  • Management now needs to determine the number of engines to be produced in each plant in each month, as well as the number of eng
    10·1 answer
  • Which of the following questions must be asked about the use of resources
    11·1 answer
  • Which of the following statements is FALSE? A) If we increase the fraction invested in the efficient portfolio beyond 100%, we a
    11·1 answer
  • Clark claimed the standard deduction in the previous tax year. In the current year, he received a state income tax refund of $90
    15·1 answer
  • What is the difference between features and benefits?<br><br><br><br> no answers to choose from.
    11·2 answers
  • Mr. Smith is a 50 year old client of Bob, who is a registered representative. Bob is trying to get Mr. Smith to purchase a non-q
    6·2 answers
  • Calculate the present value of an annuity immediate with 20 annual payments of 500 if the first payment of the annuity immediate
    8·1 answer
  • On December 31, Strike Company sold one of its batting cages for $24,440. The equipment had an original cost of $244,400 and has
    15·1 answer
  • Wally owns 200 acres of land.Wally offers to sell the land to Robert for $1,500 per acre.Robert replies that he does not need 20
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!