It is January 1, 2017 and Pegasus is contemplating the acquisition of competitor Chimera. The following...

 

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It is January 1, 2017 and Pegasus is contemplating the acquisition of competitor Chimera. The following details are available (S in millions except per share data): January 1, 2017 (S in millions) GAAP revenue GAAP net income Tax rate Assume all activities below occur on January 1, 2017: You also obtained the following transaction-related data: Offer value Sources of funds Refinanced debt Transaction fees Financing fees Pegasus $150.40 $14.04 $1 million pretax 40% Chimera $112.00 $9.92 35% $132.0 million in cash 50% of the offer value funded using Pegasus's cash reserve, currently generating a 1% annual return. Remainder of the funds needed to complete the deal raised via a new 5-year debt issuance at 5% annual interest rate. Chimera has $5 million in debt outstanding at 4% annual interest which will be refinanced as part of the acquisition $2 million pretax Cost synergies Revenue synergies Goodwill Asset write ups $2 million pretax. Apply the acquirer's tax rate on the cost synergies. $1 million in additional revenue due to cross selling opportunities. Assume revenue synergies are subject to the acquirer's standalone tax rate and profit margin. $20 million None What is the sum of all Pro forma Pre-tax Income acquisition adjustments pertaining to fees? It is January 1, 2017 and Pegasus is contemplating the acquisition of competitor Chimera. The following details are available (S in millions except per share data): January 1, 2017 (S in millions) GAAP revenue GAAP net income Tax rate Assume all activities below occur on January 1, 2017: You also obtained the following transaction-related data: Offer value Sources of funds Refinanced debt Transaction fees Financing fees Pegasus $150.40 $14.04 $1 million pretax 40% Chimera $112.00 $9.92 35% $132.0 million in cash 50% of the offer value funded using Pegasus's cash reserve, currently generating a 1% annual return. Remainder of the funds needed to complete the deal raised via a new 5-year debt issuance at 5% annual interest rate. Chimera has $5 million in debt outstanding at 4% annual interest which will be refinanced as part of the acquisition $2 million pretax Cost synergies Revenue synergies Goodwill Asset write ups $2 million pretax. Apply the acquirer's tax rate on the cost synergies. $1 million in additional revenue due to cross selling opportunities. Assume revenue synergies are subject to the acquirer's standalone tax rate and profit margin. $20 million None What is the sum of all Pro forma Pre-tax Income acquisition adjustments pertaining to fees?

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To prepare the statement of cash flows using the direct method for operating activities we need to categorize the cash inflows and outflows into opera... View the full answer