Question

 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) $8,820

 C) $8,640

 D) $8,080

 E) $9,200

12) Nadine's Home Fashions has: S2.12 million in net working capital. The firm has fixed assets with a book value of S31.64 million and a market value of $33.9 million. The firm has no long-term debt. The Home Centre is buying Nadine's for S37.5 million in cash. The acquisition will be recorded using the purchase accounting method. What is the amount of goodwill that The Home Centre will record on its balance sheet as a result of this acquisition?

 A) S1.48 million

 B) $4.14 million

 C) $5.86 million

 D) $3.74 million

 E) S3.34 million

Answer 1