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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

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

Essentials Of Investments
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
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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
Transcribed Image Text: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
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