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
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
Chapter23: Corporate Restructuring
Section: Chapter Questions
Problem 7P
Related questions
Question
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
Select one:
a.
$1075.00
b.
$575.00
c.
$425.00
d.
$555.00
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Follow-up Question
Consider the following information about Firm A and Firm T:
Item | Firm A (Aquiring Firm | Firm T (Target Firm |
Price/share | $20 | $15 |
Outstanidng shares | 50 | 25 |
Total market value | $1,000.00 | $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 merger premium?
Select one:
a.
$135.00
b.
$125.00
c.
$175.00
d.
$150.00
Solution
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