FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT
16th Edition
ISBN: 9781337902601
Author: Brigham
Publisher: CENGAGE L
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Chapter 22, Problem 8MC
Summary Introduction

Case summary: Company HH is a regional hardware chain which is considering acquiring LL. The boss of the company asked to place a value on target. There are 20 million shares @$12 per share with LL. Bet is 1.25 for LL’s stock with risk free rate 5.5% and market risk premium is 4%. 20% of capital structure of LL is financed with debt with 8% interest rate. Federal plus state tax rate is 25% and will remain same even after acquisition. The management of the company HH is asking various questions about mergers and also asking to perform merger analysis based on the given details of Company LL.

To determine: The weather mergers create value and if it is so then describe the way as per the research along with the result of this research.

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No aiPlease don't answer i posted blurred image mistakely. please comment below i will write values. if you answer with incorrect values i will give unhelpful confirm.
finance subjPlease don't answer i posted blurred image mistakely. please comment below i will write values. if you answer with incorrect values i will give unhelpful confirm.
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Financial leverage explained; Author: The Finance story teller;https://www.youtube.com/watch?v=GESzfA9odgE;License: Standard YouTube License, CC-BY