entley Corporation and Rolls Manufacturing are considering a merger. The possible ates of the economy and each company's value in that state are shown here: State Boom Probability Bentley $ 330,000 130,000 .70 Recession .30 Rolls $300,000 100.000 entley currently has a bond issue outstanding with a face value of $145,000. Rolls is an l-equity company. What is the value of each company before the merger? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Value of Bentley Value of Rolls

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
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Bentley Corporation and Rolls Manufacturing are considering a merger. The possible
states of the economy and each company's value in that state are shown here:
State
Boom
Probability Bentley
.70
$ 330,000
130,000
Recession .30
Rolls
$300,000
100,000
Bentley currently has a bond issue outstanding with a face value of $145,000. Rolls is an
all-equity company.
a. What is the value of each company before the merger? (Do not round intermediate
calculations and round your answers to the nearest whole number, e.g., 32.)
Value of Bentley
Value of Rolls
Transcribed Image Text:Bentley Corporation and Rolls Manufacturing are considering a merger. The possible states of the economy and each company's value in that state are shown here: State Boom Probability Bentley .70 $ 330,000 130,000 Recession .30 Rolls $300,000 100,000 Bentley currently has a bond issue outstanding with a face value of $145,000. Rolls is an all-equity company. a. What is the value of each company before the merger? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Value of Bentley Value of Rolls
b. What are the values of each company's debt and equity before the merger? (Leave no
cells blank - be certain to enter "0" wherever required. Do not round intermediate
calculations and round your answers to the nearest whole number, e.g., 32.)
Equity of Bentley
Debt of Bentley
Equity of Rolls
Debt of Rolls
Transcribed Image Text:b. What are the values of each company's debt and equity before the merger? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Equity of Bentley Debt of Bentley Equity of Rolls Debt of Rolls
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