Use the following information to answer the questions. Round your answers if necessary, to two decimal...

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Use the following information to answer the questions. Round your answers if necessary, to two decimal...

Use the following information to answer the questions. Round your answers if necessary, to two decimal places.

Firm A can acquire firm B for $78,750 in cash or with stock worth $78,750 priced at its current price of $25 per share of stock. The synergy value of the deal is $15,000. Both firms are 100% equity financed.

Firm A: Number of Shares = 10,000 ; Price per Share = $25.00

Firm B: Number of Shares = 10,000 ; Price per Share = $10.00

What will be the value of the post-merger firm following a cash acquisition?

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Answer 1

Answer #1

POST-MERGER VALUE OF FIRM = $ 265,250 POST-MERGER VALUE OF FIRM = VALUE OF FIRMA + VALUE OF FIRM B + SYNERGY - COST OF ACQUIS Appreciate our Efforts by a LIKE For any doubt or query comment below - THANK YOU-----

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Answer 2

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