Answer:
The Transaction Value (in $ thousands) is:
= $97,240
Explanation:
a) Data and Calculations:
Current Share Price $18.00
Shares Outstanding (Thousands) 5,000
Total market value = $90,000 ($18 * 5,000)
Total Debt ($ Thousands) $3,700
Cash ($ Thousands) $2,100
Net liability = $1,600 ($3,700 - $2,100)
Net fair value = $88,400
Acquisition Premium 10%
Premium = $8,840 ($88,400 * 10%)
Acquisition or Transaction value = $97,240 ($88,00 * 1.1)
b) The transaction value is the acquisition value of the theoretical company.
