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Jlenok [28]
3 years ago
14

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms ha

ve no debt outstanding. Firm B Firm T Shares outstanding 4,600 1,000 Price per share $ 40 $ 14 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,800. Firm T can be acquired for $16 per share in cash or by exchange of stock wherein B offers one of its share for every two of T's shares. Are the shareholders of Firm T better off with the cash offer or the stock offer
Business
1 answer:
Alborosie3 years ago
8 0

Answer:

The answer is "Share offer is better".

Explanation:

Firstly Computing the value of the combined company:

The merger value = the market value of the B company + the market value of the T + synergically advantages

= shares issued * share price of company B + outstanding shares * price per share of company T + benefits for synergies

=4,600 \times \$40+1,000\times \$14+\$8,800\\\\=\$206,800\\\\

Number of new shares which have been created following the merger = the number of shares in the T *exchange ratio

=1000 \times \frac{1}{2}\\\\=500 \ shares\\\\

The percentage price of the fusion company = the value of the fusion company /the share value of the fusion company

The per-share price of the combined company=\frac{\$206,800}{4,600+500}=\frac{\$206,800}{5,100}=\$40.55

The cash offer value = 16 dollars per share

Stock offer value = price of merged company share /2 = \frac{\$40.55}{2}=\$20.27 / \ share\\\\

Thus, share offer is better

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Describe the key stages in integrating total quality management into the strategy of an international petrochemical company
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Answer:

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Explanation:

If my answer is incorrect, pls correct me!

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Use the following information to determine the break-even point in units (rounded to the nearest whole unit): Unit sales41,000 U
Nesterboy [21]

Answer:

29,257 units

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The break-even point is reached when the revenue from sales equals total variable plus fixed costs.

The break-even point, in units is:

x*\$15.45 = \$177,000+(x*\$9.40)\\x=\frac{\$177,000}{\$15.45-\$9.40} \\x=29,256.20

Rounding up to the nearest whole unit, the break-even point is 29,257 units.

6 0
3 years ago
A piece of laborsaving equipment has just come onto the market that Mitsui Electronics, Ltd., could use to reduce costs in one o
Veronika [31]

Answer:

1a. Payback period = <u>Initial outlay</u>

                                  Annual cost saving

                                = <u>$484,500</u>

                                    $85,000

                                 = 5.7 years

b. The equipment should not be purchased because it has a longer payback period than the company's required payback period.

2a.                                      $

Annual cost saving         85,000

Less: Depreciation          <u>40,375</u>

Annual profit                    <u>44,625</u>

Simple rate of return = <u>Annual profit</u>  x 100

                                      Initial outlay

                                      <u>$44,625</u>    x 100

                                      $484,500

                                    = 9.21%

Depreciation = <u>Cost - Residual value</u>

                         estimated useful life

                      = <u>$484,500 - 0</u>

                               12 years

                      = $40,375 per annum

2b, The equipment should not be purchased because the simple rate of return is lower than the company's required rate of return.

Explanation:

Payback period is the ratio of initial outlay to annual cost saving. It is the period in which the initial outlay is recouped.

Simple rate of return is the ratio of annual profit to initial outlay. It measures the rate of return on capital invested.

5 0
2 years ago
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