Principal, Inc. is acquiring Secondary Companies for $29 million in cash. Principal has 2.5 million shares of stock outstanding at a market price of $30 a share. Secondary has 1.6 million shares of stock outstanding at a market price of $15 a share. Neither firm has any debt. The synergy gains of the acquisition is $4.5 million. What is the NPV of the acquisition?

Principal, Inc. is acquiring Secondary Companies for $29 million in cash. Principal has 2.5 million shares of stock outstanding at a market price of $30 a share. Secondary has 1.6 million shares of stock outstanding at a market price of $15 a share. Neither firm has any debt. The synergy gains of the acquisition is $4.5 million. What is the NPV of the acquisition?

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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D1. Account
Wagirin.Ltd, a retail company, wants to acquire Sabeni.Ltd, a merchandise company. The value of the acquisition is SG$ 50,000,000 worth of Wagirin.Ltd stocks. The acquisition will bring incremental value as of SG$ 10,250,000. Sabeni.Ltd has 22,000 stocks outstanding with the price of SG$ 2,250 per share. Wagirin.Ltd has stocks outstanding as of 100.000 shares with the price of SG$ 11,000 per share. The negotiation has an actual price paid for the acquisition using company stock as of SG$ 53,500,000. Required: 1. The value of Sabeni.Ltd for Wagirin.Ltd 2. The net present value of the acquisition. 3. Explain should Wagirin.Ltd acquire Sabeni.Ltd. Give your reason
If Genie went ahead with the acquisition of Aladdin, what is the total value of the acquisition? ( What is the maximum price per share that Genie should be willing to pay for this acquisition? 3)If Genie decided to go ahead with the cash acquisition, what will be its price per share after the acquisition?
Northwest supply co. has 1209 shares outstanding at a market price of $20.65 per share. Radio Supply has 5,000 shares outstanding at a market price of $36.75 per share. Neither firm has any debt. Radio Supply is acquiring Northwest Supply. The incremental value of the acquisition is $1800. What is the value of Noethqest Supply to Radio Supply? A) 26,580 B) 30,900 C) 24,780 D) 32,700 E) 25,780
Consider the following information about Firm A and Firm T: Item Firm A (Acquiring firm) Firm T (Target firm) Price per share $20 $15 Outstanding shares 50 25 Total market value $1000.00 $375 Total cost of the acquisition is $500.00 and the merger is estimated to create a synergistic gain of $700.00. What is the NPV of the acquisition to firm A? Select one: a. $1075.00 b. $575.00 c. $425.00 d. $555.00
Company A is considering the acquisition of Company B, and intends to finance this potential acquisition using only retained cash. Consider the information in Table 2 about Companies A and B, expected synergies from the acquisition and price asked by Company B's shareholders to sell their company. Table 2 A Current market value (€) 700 420 Number of shares 100 40 Expected synergies from acquisition (€) 80 Value asked by Company B's shareholders (€ ) 560 To answer the following questions make plausible assumptions if necessary. a. What is the expected combined value after acquisition? Explain your answer. b. Should A acquire B by €560? Explain your answer. c. Consider the scenario where Company A decides to finance the acquisition with equity instead of cash. What would be the optimal exchange ratio of Company Av ersus Company B shares? Explain your answer.
Can experts help me do this question, thanks. Narcissus Ltd, acquired a 30 per cent interest in Daffodil Ltd for $175,000 in cash on 1 July2019. The directors of Narcissus Limited believe this investment represents significantinfluence over the investee. The equity of Daffodil Limited at the acquisition date was asfollows: Share capital - $145,000; Retained earnings - $280,000.In addition,• For the year ended 30 June 2020, Daffodil Ltd recorded an after-tax loss of$117,000.• For the year ended 30 June 2021, Daffodil Ltd recorded an after-tax profit of$120,000 and paid a dividend of $15,000.• Increase in asset revaluation reserves (revaluation of building of Daffodil Limited) -$100,000Required:(a) Record the relevant equity accounting adjustments in the books of Narcissus Ltd for theyear ending 30 June 2021 only. (b)Discuss the effect of equity accounting relative to cost accounting on Return on Asset forNarcissus Limited for the financial year ended June 2021.
Veghie Co is acquiring Fruit Inc for $25,250 in cash. Veggie Co has 2350 shares outstanding at a market price per share of $39. Fruits Inc 1500 shares outstanding at $16 per share. Neither firm has outstanding debt. The incremental value (synergy) of the acquisition is $2300. What is the value of Veggie Co after acquisition? A) 92,700 B) 88,950 C) 56,650 D) 89,150 E) 73,750
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
West, Inc., acquired 60% of East Co's outstanding common stock. West paid $800,000 to acquire the stock. West plans to relocate East's company headquarters, which is expected to cost between $100,000 and $300,000. The present value of the probability-adjusted relocation cost is $240,000. What is West's acquisition cost? O $1,100,000 O $800,000 O O $900,000 $1,040,000
Pioneer Industries net worth is $ 75million. If the company was to be wound up today, it would realize $ 45million from the liquidation of its assets and pay $ 18million to its creditors and preference shareholders in full settlement of their claims. The number of outstanding equity shares of Pioneer is 1.5 million. Determine Pioneer's book value per share and its liquidation value.
Dineshbhai

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