Bentley Corporation and Rolls Manufacturing are considering a merger. The possible states of the economy and each company’s value in that state are shown here: StateProbabilityBentleyRollsBoom.70$ 330,000$ 300,000Recession.30130,000100,000 Bentley currently has a bond issue outstanding with a face value of $145,000. Rolls is an all-equity company. d-2. What would be the value of the merged company's debt and equity? (Do not roundintermediate calculations and round your answers to the nearest whole number,e.g., 32.)Value of debtValue of equitye-1. How much would shareholders gain or lose in the merger? (Do not roundintermediate calculations and round your answer to the nearest whole number,e.g., 32. Enter a gain as a positive number and a loss as a negative number.)Shareholders' gain or loss c. If the companies continue to operate separately, what are the total value of thecompanies, the total value of the equity, and the total value of the debt? (Do notround intermediate calculations and round your answers to the nearest wholenumber, e.g., 32.)Value of companiesValue of equityValue of debtd-1. What would be the value of the merged company? (Do not round intermediatecalculations and round your answer to the nearest whole number, e.g., 32.)Merged company value

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Bentley Corporation and Rolls Manufacturing are considering a merger. The possible states of the economy and each company’s value in that state are shown here: State Probability Bentley Rolls Boom .70 $ 330,000 $ 300,000 Recession .30 130,000 100,000 Bentley currently has a bond issue outstanding with a face value of $145,000. Rolls is an all-equity company.

Bentley Corporation and Rolls Manufacturing are considering a merger. The possible states of the economy and each company’s value in that state are shown here: State Probability Bentley Rolls Boom .70 $ 330,000 $ 300,000 Recession .30 130,000 100,000 Bentley currently has a bond issue outstanding with a face value of $145,000. Rolls is an all-equity company.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter7: Corporations: Reorganizations

Section: Chapter Questions

Problem 10DQ

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State	Probability	Bentley	Rolls
Boom	.70	$ 330,000	$ 300,000
Recession	.30	130,000	100,000

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