Question

Bidding firm (Firm B) has 5679 shares outstanding that are currently selling at $47 per share....

Bidding firm (Firm B) has 5679 shares outstanding that are currently selling at $47 per share. Target firm (Firm T) has 1691 shares outstanding that are currently selling at $16 per share. Assume that both firms have no debt outstanding. Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8327. Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers three of its shares for every five of T's shares, what is the NPV of the merger?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the following pre-merger information about a bidding firm (Firm B) and a target firm (Firm...
Consider the following pre-merger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares Outstanding 8,700 3,600 Price per Share $47 $19 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $16,700. Suppose Firm B agrees to a merger by an exchange of stock. If B offers one of its shares for every 2 of T's shares....
Consider the following pre-merger information about a bidding firm (Firm B) and a target firm (Firm...
Consider the following pre-merger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares Outstanding 8,700 3,600 Price per Share $47 $19 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $16,700. If Firm T is willing to be acquired for $21 per share in cash, what is the NPV of the merger? $3,600 $2,400 8,700 $9,500
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm...
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T   Shares outstanding 4,800 1,200   Price per share $ 44 $ 16    Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,900. Firm T can be acquired for $18 per share in cash or by exchange of stock wherein B offers one of its...
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm...
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T   Shares outstanding 5,400 1,300   Price per share $ 53 $ 23    Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $7,900. Firm T can be acquired for $25 per share in cash or by exchange of stock wherein B offers one of its...
Gobi Desserts is bidding to take over Universal Puddings. Gobi has 3,500 shares outstanding, selling at...
Gobi Desserts is bidding to take over Universal Puddings. Gobi has 3,500 shares outstanding, selling at $55 per share. Universal has 2,500 shares outstanding, selling at $22.50 a share. Gobi estimates the economic gain from the merger to be $22,500. 1. If Universal can be acquired for $25 a share, what is the NPV of the merger to Gobi? 2. What will Gobi sell for when the market learns that it plans to acquire Universal for $25 a share? 3....
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm...
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T   Shares outstanding 5,000 1,600   Price per share $ 51 $ 20 At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers?
Firm A is acquiring Firm B. Firm A’s share price is $12 and Firm B's share...
Firm A is acquiring Firm B. Firm A’s share price is $12 and Firm B's share price is $4. Both firms have 1 million shares outstanding. Firm A expects a discounted synergistic value of $2 million from the merger. If Firm A pays $5 million cash to Firm B's shareholders, what is the NPV of the acquisition?
John’s shop has 700 shares outstanding at a market price per share of $17. Sam’s has...
John’s shop has 700 shares outstanding at a market price per share of $17. Sam’s has 300 shares outstanding at a market price of $35 a share. Neither firm has any debt. Sam’s is acquiring John’s for $27,000 in cash. What is the merger premium per share? Red’s, Inc. and Bed’s, Inc. are all-equity firms. Red’s has 3,700 shares outstanding at a market price of $14 a share. Bed’s has 500 shares outstanding at a price of $18 a share....
43) Firm A is planning on merging with Firm B. Firm A currently has 2,300 shares...
43) Firm A is planning on merging with Firm B. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share. Firm B has 750 shares outstanding at a price of $15 a share. The merger will create $200 of synergy. How many of its shares should Firm A offer in exchange for all of Firm B's share if it wants its acquisition cost to be $12,000?     43) ______ A) 607B) 593C) 598D) 584E) 600...
Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a...
Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%. Required: a) Calculate the total market value of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT