Baghiben Consider the following premerger information about Firm X and Firm Y:Firm XFirm YTotal earningsShares outstanding$ 93,000$21,00050,00015,000Per-share values:MarketBook$50$ 17$ 21$8Assume that Firm X acquires Firm Y by issuing long-term debt to purchases all theshares outstanding at a merger premium of $8 per share. Construct the postmergerbalance sheet for Firm X assuming the use of the purchase accounting method. (Do notround intermediate calculations and round your answers to the nearest wholenumber, e.g., 32.)Assets from XAssets from YGoodwillTotal Assets XY

Therefore, the postmerger balance sheet for Firm X will look like this:Assets AmountAssets from X $…

Answered: Consider the following premerger…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider the following information about Firm A and Firm T: Item Firm A (Acquiring firm) Firm T (Target firm) Price per share $20 $15 Outstanding shares 50 25 Total market value $1000.00 $375 Total cost of the acquisition is $500.00 and the merger is estimated to create a synergistic gain of $700.00. What is the merger premium? Select one: a. $150.00 b. $135.00 c. $125.00 d. $175.00
Consider the following information about Firm A and Firm T: Item Firm A (Aquiring Firm Firm T (Target Firm Price/share $20 $15 Outstanidng shares 50 25 Total market value $1,000.00 $375 Total cost of the acquisition is $500.00 and the merger is estimated to create a synergistic gain of $700.00. What is the merger premium? Select one: a. $135.00 b. $125.00 c. $175.00 d. $150.00
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Shares outstanding Price per share Firm B Firm T 6,200 1,400 $ 48 $ 18 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,600. Firm T can be acquired for $20 per share in cash or by exchange of stock wherein B offers one of its shares for every two of T's shares. Are the shareholders of Firm T better off with the cash offer or the stock offer? Cash offer is better Share offer is better At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Exchange ratio to 1
Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y $79,000 $14,000 36,000 11,000 Total earnings Shares outstanding Per-share values: Market Book $ $ Assets from X Assets from Y Goodwill Total Assets XY 51 $ 11 $ 16 6 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $8 per share, and that neither firm has any debt before or after the merger. Construct the postmerger balance sheet for Firm X assuming the use of the purchase accounting method. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 95,000 $ 22,000 Shares outstanding 52,000 17,000 Pre-share values: Market $ 52 $ 21 Book $ 15 $ 10 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share, and that neither firm has any debt before or after the merger. a. Assuming the pooling of interests method is used, what is the equity of the combined firm? Equity value $ b. List the assets of the combined firm assuming the purchase accounting method is used. Assets from X $ Assets from Y Goodwill Total Assets XY $ Please dont provide solution image based thnx
Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 40,000 $ 15,000 Shares outstanding 20,000 20,000 Per-share values: Market $ 49 $ 18 Book $ 20 $ 7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $4 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger?
4. An entity showed the following data:Share capital, par value P50 5,000,000Share premium 200,000Retained Earnings 2,000,000Market value of share on declaration date 75Market value of share on distribution date 85Treat each item independently: e. If the entity would declare a 2 for 1 share split, How much would be the new par value?
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T 1,300 $23 Shares outstanding 5,400 Price per share $53 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $7,900. Firm T can be acquired for $25 per share in cash or by exchange of stock wherein B offers one of its share for every two of T's shares. Are the shareholders of Firm T better off with the cash offer or the stock offer? O Share offer is better O Cash offer is better At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Exchange ratio
Consider the following pre-merger information about firm X and firm Y: Firm X Firm Y $90,000 $52,200 46,800 36,000 Total earnings Shares outstanding Per-share values: Market Book $ 53 $ 21 $ 19 SASA $ 9 Assume that firm X acquires firm Y by paying cash for all the shares outstanding at a merger premium of $5 per share. Assuming that neither firm has any debt before or after the merger, construct the post-merger balance sheet for firm X assuming the use of purchase accounting methods.
Consider the following premerger information about Firm X and Firm Y: Firm X $ 40,000 20,000 Total earnings Shares outstanding Per-share values: Market Book $49 $ 20 Firm Y $15,000 20,000 Total asset of the combined company $18 $7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger? Total assets XY Total equity XY = $880,000 Total assets XY = Total equity XY = $760,000 Total assets XY = Total equity XY = $1,240,000 Total assets XY = Total equity XY = $853,600 Total assets XY = Total equity XY = $924,000 =
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Shares outstanding Price per share Firm B 5,000 $ 42 Firm T 1,600 $17 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,000. Firm T can be acquired for $19 per share in cash or by exchange of stock wherein B offers one of its share for every two of T's shares. a. Shareholders of Firm T b. Exchange ratio a. Are the shareholders of Firm T better off with the cash offer or the stock offer? b. At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) to 1
You're given the following details of an acquisition of Target Co. by Acquirer Ltd.. What is the transaction value for this acquisition of Target Co.? Acquisition of Target Co. by Acquirer Ltd. Target Share Price ($/sh.) $85.40 Acquisition Premium 15% Diluted Shares Outstanding (MM) 670 Target Total Debt Target Cash and Cash Equivalents % Debt Financing % Equity Financing Equity Financing Fees Debt Financing Fees Other Transaction Costs $3,562 $5,147 40% 60% 4.0% 1.5% $800

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