ZuoTi.Pro
Question

Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little...

Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1 million shares outstanding. Big Fish expects a discounted synergistic value of $1 million from the merging of operations of the two firms. If Big Fish pays cash of $2.2 million to Little Fish's shareholders, what is the value of the merged firm?

$11,000,000

$13,000,000

$10,000,000

$12,000,000

$10,800,000

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Value of merged firm = Value of Big+ Value of Little + Value of Synergy - Cash Purchase Consideration.

Value of merged firm=
(10×1)+(2×1)+1-2.2

Value of merged firm= $10.8 million.

Answer: $10,800,000

0 0
Add a comment
Know the answer?
Add Answer to:
Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little...

    Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1 million shares outstanding. Big Fish expects a discounted synergistic value of $1 million from the merging of operations of the two firms. If Big Fish issues $2.2 million worth of shares to Little Fish's shareholders, what is the NPV of the acquisition? Round your answer to the nearest dollar. $655,738 $144,262 $1,344,262 $823,524 $800,000

  • Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little...

    Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1 million shares outstanding. Big Fish expects a discounted synergistic value of $1 million from the merging of operations of the two firms. If Big Fish issues $2.2 million worth of shares to Little Fish's shareholders, what is the NPV of the acquisition? Round your answer to the nearest dollar. $144,262 $1,344,262 $823,524 $655,738 is correct...

  • CPI, Inc. is acquiring JW for R470 000 in cash. CPI has 27 000 shares outstanding at a market value of R320 a share

     2. POST ACQUISITION VALUE CPI, Inc. is acquiring JW for R470 000 in cash. CPI has 27 000 shares outstanding at a market value of R320 a share. JW has 32 000 shares outstanding at a market price of R140 a share. Neither firm has any debt. The synergy value of the acquisition is R18 000. What is the value of CPI after the acquisition? 3. NUMBER OF NEW SHARES TO BE ISSUED FOR ACQUISITION GM Corporation is being acquired by BKF Ltd. for...

  • Use the information for the question(s) below. Big Blue Banana (BBB) is a clothing retailer with...

    Use the information for the question(s) below. Big Blue Banana (BBB) is a clothing retailer with a current share price of $10.00 and with 25 million shares outstanding. Suppose that Big Blue Banana announces plans to lower its corporate taxes by borrowing $100 million and using the proceeds to repurchase shares. gestion Suppose that BBB pays corporate taxes of 35% and that shareholders expects the change in debt to be permanent. Assume that capital markets are perfect except for the...

  • Firm X has a market value of S8,400 with 120 shares outstanding and a price per share of $70

     11) Firm X has a market value of S8,400 with 120 shares outstanding and a price per share of $70. Firm Y has a market value of S2,000 with 100 shares outstanding and a price per share of S20. Firm X is acquiring Firm Y by exchanging 30 of its shares for all 100 of Firm Y's shares. Assume the merger creates S400 of synergy. What will be the value of Firm X's shareholders' stake in the merged firm? A) $9,050 B)...

  • Harrison​ Holdings, Inc.​ (HHI) is publicly​ traded, with a current share price of $ 40 per...

    Harrison​ Holdings, Inc.​ (HHI) is publicly​ traded, with a current share price of $ 40 per share. HHI has 30 million shares​ outstanding, as well as $ 67 million in debt. The founder of​ HHI, Harry​ Harrison, made his fortune in the fast food business. He sold off part of his fast food​ empire, and purchased a professional hockey team.​ HHI's only assets are the hockey​ team, together with 50 % of the outstanding shares of​ Harry's Hotdogs restaurant chain.​...

  • QUESTION 2 ABC Ltd. has decided to raise capital via a rights issue. The share price...

    QUESTION 2 ABC Ltd. has decided to raise capital via a rights issue. The share price is currently $5.50 and ABC intends to raise $5m. There are currently 6.25m shares in issue and ABC is offering a 1 for 5 rights issue. Calculate the Ex-Rights Price.                                           (4 marks) BBC Co is a medium-sized manufacturing company which is considering a 1 for 5 rights issue at a 15% discount to the current market price of $4.00 per share. Issue costs are...

  • Heavy Equipment and Machinery Inc. Trial Balance At December 31, 2019

    What is the answer to these tables? here is all the information that had been given to me and my answers to the question that I think needs to be answered to complete the two tablesYou have been hired as a Financial Consultant by Heavy Equipment and Machinery Inc. (HEMI).  HEMI is a private corporation that has finished its first year of operations. HEMI's owners plan to list the business on the Toronto Stock Exchange  (TSE) in the next 5 years; accordingly,...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT