It generates a positive net present value to the shareholders of an acquiring firm.
<h3>Why Do Companies Merge With or Acquire Other Companies?</h3>
Mergers and acquisitions (M&As) are the acts of combining two or more companies or assets in order to stimulate growth, gain a competitive advantage, increase market share, or influence supply chains.
KEY LESSONS
- Mergers and acquisitions (M&As) are the acts of combining two or more companies or assets in order to stimulate growth, gain a competitive advantage, increase market share, or influence supply chains.
- A merger is the joining of two companies in which one of the companies ceases to exist after being absorbed by the other.
- A merger occurs when one company acquires a majority stake in the target company, which keeps its name and legal structure.
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Answer:
The value of the stock today is $28.48
Explanation:
To calculate the value of the stock today, we will use the Dividend discount model which bases the value of a stock based on the present value of the expected future dividends from the stock. The value of the stock today using this model should be,
P0 = 1 / (1+0.1)^3 + 1 * (1+0.4) / (1+0.1)^4 + 1 * (1+0.4)^2 / (1+0.1)^5 +
[ (1 * (1+0.4)^2 * (1+0.05) / (0.10 - 0.05)) / (1+0.1)^5 ]
P0 = $28.48
Answer:
Answer: Yes, There is a linear correlation between the weights of the bears and their chest sizes because the absolute value of the test statistics 0.961 exceeds the critical value
Explanation:
Claim: There is a linear correlation between the weights of the bears and their chest sizes
Null hypothesis, H₀ : p=0 (there is no significant correlation)
Alternative hypothesis, H₁ : p ≠0 (there is no significant correlation)
Level of significance, α = 0.05
Decision rule: Reject H₀ if robserved ≥ rcritical
Sample correlation coefficient r = robserved = 0.961
Yes, There is a linear correlation between the weights of the bears and their chest sizes because the absolute value of the test statistics 0.961 exceeds the critical value
Answer:a The corporation can make a public issue of shares to obtain capital to make the purchase. ( B) The accountant will open a temporary account called the business purchase account and the vendor account to record the purchase
Explanation:
a. When a corporation want to purchase a existing business ,the purchase price may be paid either totally in cash or partly in cash and partly in shares or in some cases totally in shares. The method of payment is arranged between the corporation and the existing business. If the company makes a public issue of shares to raise funds for the purpose of acquisition of the business. A statement in the prospectus to issue the shares that the vendor will be paid either totally or partly in shares boost the investors confidence in the business because they see it as a sign that the vendor has faith in the future prospect of the business under the new ownership. The shares allotted as consideration for the purchase becomes part of the issued capital of the company.
b. The temporary account and the vendor account would include the following
1.Dr the business purchase account
Cr the vendor account
With the agreed purchase price,and the allotment of shares or debenture as part of the purchase price
2. Dr the asset, including Goodwill if any to their respective account,
Cr the total value of asset taken over in one amount to the business purchase account
3. Dr the total value of liabilities taken over in one amount to the business purchase account
Cr the liabilities to their respective account
4. Dr vendor account
Cr the corporation capital account both with the purchase price when paid
