Homework Answers
Answer:
| a) |
| value of benteley = 0.75 * 308000 + 0.25 *119000 = $260,750 |
| value of rolls = 0.75 * 278000 + 0.25 * 89000 = $230,750 |
| b) |
| equity of bentley = 0.75 * (308000-134000) + 0.25(0) =130,500 |
| debt of debteley = 260750 - 130500 = $130,250 |
| equity of rolls = $230,750 |
| debt of rolls = 0 |
| c) |
| values of company = 130500+130250+230750=$491,500 |
| value of equity = $130500+230750=$361,250 |
| value of debt = $130,250 |
| d1) |
| merged company value = 0.75 * (308000+278000) + 0.25 * (119000+89000) |
| =439500+52000= $491,500 |
| value of equity = 491500-134000= $357,500 |
| value of debt = 491500 - 357500= $134,000 |
| e1) share holder loss = 361250- 357,500 = $3750 |
| e2) bondholder gain = 134000 - 130250 = $3750 |
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