2 Use the following information to answer problems 2a through 2e. Consider two all-equity financed firms,...

 

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2 Use the following information to answer problems 2a through 2e. Consider two all-equity financed firms, A and B Number of shares Price per share 4 b. Firm A 1,000,000 $30 Firm A estimates that the value of synergy from acquiring Firm B is $5,000,000. Firm A is considering acquiring Firm B by either: a) purchasing its shares for a cash offer of $29.50 per share; b) offering it 30% stock; or c) offering shares of stock in exchange for shares of Firm B What is the cost of the cash acquisition? C. d. c. Firm B 500,000 $25 What is the cost of the 30% stock acquisition? What is the NPV of the cash acquisition? What is the NPV of the 30% stock acquisition? If Firm A offers 450,000 shares of stock in exchange for 500,000 shares of Firm B, what will the price be after the acquisition? 2 Use the following information to answer problems 2a through 2e. Consider two all-equity financed firms, A and B Number of shares Price per share 4 b. Firm A 1,000,000 $30 Firm A estimates that the value of synergy from acquiring Firm B is $5,000,000. Firm A is considering acquiring Firm B by either: a) purchasing its shares for a cash offer of $29.50 per share; b) offering it 30% stock; or c) offering shares of stock in exchange for shares of Firm B What is the cost of the cash acquisition? C. d. c. Firm B 500,000 $25 What is the cost of the 30% stock acquisition? What is the NPV of the cash acquisition? What is the NPV of the 30% stock acquisition? If Firm A offers 450,000 shares of stock in exchange for 500,000 shares of Firm B, what will the price be after the acquisition?

Answer rating: 100% (QA)

Answer a Cost of Cash acquisition 2950 500000 14750000 Answer b Cost of 30 stock ... View the full answer