The gain from acquisition.

Question

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Answer 1

Question

Chapter 21, Problem 11QP

a.

Summary Introduction

To determine: The gain from acquisition.

b.

Summary Introduction

To determine: The cost of acquisition if the price is $25.

c.

Summary Introduction

To determine: The cost of acquisition if Company B offers one share for three shares of Company S.

d.

Summary Introduction

To determine: The cost of cash offer.

e.

Summary Introduction

To determine: The cost of share offer.

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Free Cash Flow Use the financial statements shown here for Lan & Chen Technologies. The federal-plus-state tax rate is 25%. Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2023 2022 Sales $960,000 $900,000 Expenses excluding depreciation and amortization 820,000 774,000 EBITDA $140,000 $126,000 Depreciation and amortization 33,000 31,500 EBIT $107,000 $94,500 Interest Expense 10,000 8,900 EBT $97,000 $85,600 Taxes (25%) 24,250 21,400 Net income $72,750 $64,200 Common dividends $43,000 $41,230 Addition to retained earnings $29,750 $22,970 Lan & Chen Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2023 2022 Cash and cash equivalents $48,250 $45,000 Short-term investments 3,200 3,600 Accounts Receivable 280,500 270,000 Inventories 141,000 135,000 Total current assets $472,950 $453,600 Net fixed assets 360,750 315,000 Total assets…

The Talley Corporation had taxable operating income of $365,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $50,000, (2) dividends received of $25,000, and (3) dividends paid of $35,000. Its federal tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. What is the firm’s taxable income? What is the tax expense? What is the after-tax income?

Answer 2

Question

Chapter 21, Problem 11QP

a.

Summary Introduction

To determine: The gain from acquisition.

b.

Summary Introduction

To determine: The cost of acquisition if the price is $25.

c.

Summary Introduction

To determine: The cost of acquisition if Company B offers one share for three shares of Company S.

d.

Summary Introduction

To determine: The cost of cash offer.

e.

Summary Introduction

To determine: The cost of share offer.

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Answer 3

Question

Chapter 21, Problem 11QP

a.

Summary Introduction

To determine: The gain from acquisition.

b.

Summary Introduction

To determine: The cost of acquisition if the price is $25.

c.

Summary Introduction

To determine: The cost of acquisition if Company B offers one share for three shares of Company S.

d.

Summary Introduction

To determine: The cost of cash offer.

e.

Summary Introduction

To determine: The cost of share offer.

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Answer 4

Question

Chapter 21, Problem 11QP

a.

Summary Introduction

To determine: The gain from acquisition.

b.

Summary Introduction

To determine: The cost of acquisition if the price is $25.

c.

Summary Introduction

To determine: The cost of acquisition if Company B offers one share for three shares of Company S.

d.

Summary Introduction

To determine: The cost of cash offer.

e.

Summary Introduction

To determine: The cost of share offer.

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Answer 5

Chapter 21, Problem 11QP

a.

Summary Introduction

To determine: The gain from acquisition.

b.

Summary Introduction

To determine: The cost of acquisition if the price is $25.

c.

Summary Introduction

To determine: The cost of acquisition if Company B offers one share for three shares of Company S.

d.

Summary Introduction

To determine: The cost of cash offer.

e.

Summary Introduction

To determine: The cost of share offer.

Answer 6

Chapter 21, Problem 11QP

a.

Summary Introduction

To determine: The gain from acquisition.

Answer 7

Chapter 21, Problem 11QP

a.

Summary Introduction

To determine: The gain from acquisition.

Answer 8

b.

Summary Introduction

To determine: The cost of acquisition if the price is $25.

Answer 9

b.

Summary Introduction

To determine: The cost of acquisition if the price is $25.

Answer 10

c.

Summary Introduction

To determine: The cost of acquisition if Company B offers one share for three shares of Company S.

Answer 11

c.

Summary Introduction

To determine: The cost of acquisition if Company B offers one share for three shares of Company S.

Answer 12

d.

Summary Introduction

To determine: The cost of cash offer.

Answer 13

d.

Summary Introduction

To determine: The cost of cash offer.

Answer 14

e.

Summary Introduction

To determine: The cost of share offer.

Answer 15

e.

Summary Introduction

To determine: The cost of share offer.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 21 - Prob. 1QP Ch. 21 - Prob. 2QP Ch. 21 - Prob. 3QP Ch. 21 - Prob. 4QP Ch. 21 - Prob. 5QP Ch. 21 - Prob. 6QP Ch. 21 - Prob. 7QP Ch. 21 - Prob. 8QP Ch. 21 - Prob. 9QP Ch. 21 - Prob. 10QP

The gain from acquisition.

To determine: The gain from acquisition.

To determine: The cost of acquisition if the price is $25.

To determine: The cost of acquisition if Company B offers one share for three shares of Company S.

To determine: The cost of cash offer.

To determine: The cost of share offer.

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Chapter 21 Solutions