Firm A has 196,000 shares of stock outstanding, each with a market price of $10 per share. Firm B has 150,000 shares of stock outstanding, each with a market value of $25 per share. Firm B have agreed to take over Firm A using an exchange ratio will be 3:2 meaning that firm A stockholders will receive 3 share of firm B for every 2 shares they currently hold in firm A. What are the shares outstanding of the combined firm?

Firm A has 196,000 shares of stock outstanding, each with a market price of $10 per share. Firm B has 150,000 shares of stock outstanding, each with a market value of $25 per share. Firm B have agreed to take over Firm A using an exchange ratio will be 3:2 meaning that firm A stockholders will receive 3 share of firm B for every 2 shares they currently hold in firm A. What are the shares outstanding of the combined firm?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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13.
Buyer Cafe is attempting to acquire the Target Club. Certain financial data on these corporations are summarized in the following table. Item Buyer Cafe Target Club Earnings Available for common stock $20,000 $8,000 Number of shares of common stock outstanding 20,000 4000 Market price per share $12 $24 EPS $1 $2 Buyer’s Cafe has sufficient authorized but unissued shares to carry out the proposed merger. If the ratio of exchange is 1.8, what will be the new earnings per share (EPS) of the merged firm?
Both of Firm A and Firm B are 100 equity firms. You estimate that the incremental value of the acquisition is $100,000. Firm B has indicated that it will agree to a sale if the price is $150,000, payable in cash or stock. Firm B is worth $100 as a stand-alone, so this is the minimum value that we could assign to Firm B. Should Firm A acquire Firm B? Explain 2 reasons of mergers. Firm A Firm B Price per share $2 $1 Number of shares 50,000 100,0000
Castles in the Sand currently sells at a price-earnings multiple of 24. The firm has 2 million shares outstanding and sells at a price per share of $60. Firm Foundation has a P/E multiple of 12, has 1 million shares outstanding, and sells at a price per share of $30. a. If Castles acquires the other firm by exchanging one of its shares for every two of Firm Foundation, what will be the earnings per share of the merged firm? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What will be the price per share for Castle? Note: Do not round intermediate calculations. c. What would be Firm Foundation's value of stock post merger? Note: Do not round intermediate calculations. Enter your answer in millions. d. What should be the P/E of the new firm if the merger has no economic gains? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. e. Calculate Castles' price per share if the market does not realize that the P/E ratio…
Castles in the Sand currently sells at a price-earnings multiple of 24. The firm has 2 million shares outstanding and sells at a price per share of $60. Firm Foundation has a P/E multiple of 12, has 1 million shares outstanding, and sells at a price per share of $30. a. If Castles acquires the other firm by exchanging one of its shares for every two of Firm Foundation, what will be the earnings per share of the merged firm? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What will be the price per share for Castle? Note: Do not round intermediate calculations. c. What would be Firm Foundation's value of stock post merger? Note: Do not round intermediate calculations. Enter your answer in millions. d. What should be the P/E of the new firm if the merger has no economic gains? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. e. Calculate Castles' price per share if the market does not realize that the P/E ratio…
Firm X has 100 shares outstanding at $20 per share. Firm Y also has 100 shares outstanding with a current price of $5 per share. Firm X offers Y's shareholders $8 per share in cash. Firm X's management expects the combined value of the firm to be $3,000. The expected gain and the NPV of the merger to X are, respectively, closest to: a) $500 and $300 b) $300 and $200 c) $500 and $200 d) $300 and $300
Finance Loki Inc. and Thor Inc. have entered into a stock swap merger agreement whereby Loki will pay a 35% premium over Thor’s pre-merger price. A. If Thor’s pre-merger price per share was $37 and Loki’s was $52, what exchange ratio will Loki need to offer? B. On the day of the merger announcement, the increase in Thor (the target firm’s) stock price will be ______(higher/lower) than 35% (the takeover premium). C. Based on your answer in part B of this question, explain why you think Thor’s stock price increase will be higher or lower than the takeover premium at the time of the merger announcement.
The shareholders of Bread Company have voted in favor of a buyout offer from Butter Corporation. Information about each firm is given here: Bread Butter Price-earnings ratio 7.2 14.4 Shares outstanding 73,000 146,000 Earnings $ 210,000 $ 630,000 Bread’s shareholders will receive one share of Butter stock for every three shares they hold in Bread. a-1. What will the EPS of Butter be after the merger? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a-2. What will the PE ratio be if the NPV of the acquisition is zero? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What must Butter feel is the value of the synergy between these two firms?
Ee 111.
Nets & Flicks would like to take over Jeff & Bezos. Both companies are debt-free. For that, Nets & Flicks is offering to Jeff & Bezos cash and cash-like equivalents in the total amount of $73,000. Nets & Flicks currently has a total of 1,750 shares, and the market value of each share is $20. Jeff & Bezos, on the other hand, currently has a total of 2,500 shares, and the market value of each share is $28. The merger of these two companies would have a $5,000 incremental value if it is successful. The net present value of the merger from the point of view of Nets & Flicks equals. Multiple Choice $3,000 $4,000 $2,000 $5,000 $6,000
Nataro, Inc is planning on merging with Celestia Corp. Nataro, Inc with will pay shareholders the current value of their stock using shares of Nataro as the form of payment. Nataro has 5600 shares outstanding at a market price of $27.25 per share. Celestia Corp has 8,000 shares outstanding at a market price of $5.75 per share. The expected synergy created by the merger is $4200. What is the value of the merged firm (excludes cost of acquisition)? A. 205600 B. 201400 C. 159600 D. 54400 E. 68750
The shareholders of Bread Company have voted in favor of a buyout offer from Butter Corporation. Information about each firm is given here: Bread Butter Price-earnings ratio 16 23 Shares outstanding 96,000 230,000 Earnings $ 180,000 $ 900,000 Bread's shareholders will receive one share of Butter stock for every three shares they hold in Bread. a-1. What will the EPS of Butter be after the merger? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a-2. What will the PE ratio be if the NPV of the acquisition is zero? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What must Butter feel is the value of the synergy between these two firms? a-1. EPS a-2. PE b. Synergy value