Fairfax and Goldwin are all-equity firms. Fairfax has 30,000 shares outstanding at a market price of $51.90 a share whil...
Fairfax and Goldwin are all-equity firms. Fairfax has 30,000 shares outstanding at a market price of $51.90 a share while Goldwin has 10,500 shares outstanding at a price of $37.40 a share. Fairfax is acquiring Goldwin for $431,000 in cash. The incremental value of the acquisition is $61,000. What is the net present value of acquiring Goldwin to Fairfax? $23,200 $21,800 $21,350 $22,700 $19,900
Homework Answers
Net Present value = Present value of benefits - Present value of payments
= 10,500*37.40 +61,000 - 431,000
= $22,700
Hence, the answer is $22,700
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