Consider the following premerger information about Firm X and Firm Y: Total earnings Shares outstanding Per-share values: Market Book Firm X $40,000 20,000 $49 $20 Firm Y $15,000 20,000 $18 $7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger?

Consider the following premerger information about Firm X and Firm Y: Total earnings Shares outstanding Per-share values: Market Book Firm X $40,000 20,000 $49 $20 Firm Y $15,000 20,000 $18 $7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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4. The following table shows pre-merger data for ABC Company and XYZ, Inc. ABC XYZ No of share outstanding 2,000,000 5,000,000 EPS $2.50 $4.00 Price per share $15.00 $60 a) Assume XYZ is taking over ABC by issuing one of its shares for four shares of ABC. If there is no synergy, what would be the post-merger share price of XYZ? What would be the NPV of the merger? b) Assume there is synergy value of $4,200,000 created from the merger. What would be the post-merger price per share of XYZ? What would be the NPV of the merger? 5. Lazos Company is in distress mainly due to its failure to adopt the current technology. Creditors took Lazos to bankruptcy court and Lazos is fighting for a reorganization. The following is its condensed balance sheet. Book Value Market Value Current assets $ 120,000.00 $ 100,000.00 Machinery 200,000.00 150,000.00 Other fixed…
Mammoth Inc. is acquiring Snail Ltd. Mammoth's share price is $50 and Snail's share price is $10. Both firms have 1 million shares outstanding. Mammoth expects a discounted synergistic value of $5 million from the merging of operations of the two firms. If Mammoth pays cash of $11.5 million to Snail's shareholders, what is the value of the merged firm? $68.5 million $65.0 million $60.0 million $63.5 million
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Loki, Inc. and Thor, Inc. have entered into a stock-swap merger agreement whereby Loki will pay a 38% premium over Thor's pre-merger price. If Thor's pre-merger price per share was $40 and Loki's was $52, what exchange ratio will Loki need to offer? The ratio should be shares of Loki for every share of Thor. (Round to two decimal places.) C
Linpro Industries is considering the acquisition of Odetics Inc. in a stock-for-stock exchange. Assume no immediate synergistic benefits are expected. Selected financial data on the two companies are shown below: Linpro Odetics Sales (millions) $480 $90 Net income (millions) $38 $10.4 Common shares outstanding (millions) 10 2.1 Earnings per share $3.80 $4.95 Common stock (price per share) $45.60 $74.25 Calculate Linpro's post-merger EPS if the Odetics shareholders accept an offer of $90 a share in a stock-for-stock exchange. Question 9Answer a. $4.38 b. $3.81 c. $4.29 d. $3.42
Apex Corporation is considering the purchase of Pinnacle Company in a stock-for-stock exchange. Selected data on the two companies are shown in the following table: Apex Pinnacle $845 $120 40 36 Sales (millions) Earnings after taxes (millions) Common shares outstanding (millions) Share price Earnings per share Dividends per share. P/E ratio Dividend payout ratio Assume that there are no synergistic benefits as the result of the merger. Determine EPS for the combined company if Apex offers a (Round your answers to three decimal places): a. 10 percent premium for Pinnacle $ b. 20 percent premium for Pinnacle $ c. 30 percent premium for Pinnacle $2,190 $ 280 70 72 $ $ $ 4.00 2.00 18 50% $ $ 3.00 1.20 12 40%
Xterm R US has offered $178,500 cash for all of the common stock of Outdoor Co. Based on recent market information Outdoor Co is worth $174,200 as an independent operation. If the merger makes economic sense for Xterm R US, what is the minimum estimated value of the synergistic benefits from the merger? A)4300 B) 4730 C) 5160 D) 4000 E) 4945
(please correct answer and) Question 26 Firm A and Firm B are both all - equity firms. Firm A has 2,200 shares outstanding at a market price of $16 per share. Firm B has 4,020 shares outstanding at a market price of $18 per share. Firm B is acquiring Firm A for $30,000 in cash. The incremental value of the acquisition is $3,400. What is the net present value of the acquisition? $840-$990-$1,020 $ 8,600 $9,050
In a split - off transaction, if the subsidiary's book value is $150 million, and the parent company decides to distribute 80% of the subsidiary's book value to the shareholders of the new entity, how much will a shareholder holding 100 shares in the new entity receive in cash? Assume that the company has 1.25 million shares outstanding.
EPS and postmerger price Data for Henry Company and Mayer Services are given in the following table. Henry Company is considering merging with Mayer by swap-ping 1.25 shares of its stock for each share of Mayer stock. Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging. Item Henry company Mayer Services Earnings available for common stock. $225,000 $50,000 Number of shares of common stock outstanding. $90,000 $15,000 Market price per share . $45 $50 a. Calculate the ratio of exchange in market price?

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