Firm A is planning on merging with Firm B.
Firm A will pay
Firm B's stockholders the current value of their stock in shares
of Firm A. Firm A currently has 2,300 shares of stock
outstanding at a market price of $20 a share. Firm B has 1,800
shares outstanding at a price of $15 a share. What is the value
per share of the merged firm?
A. $19.00
B. $19.18
Value per share = [(2,300 $20) + (1,800 $15)] [2,300 +
C. $19.44 (1,800 $15 $20)] = $73,000 3,650 = $20
D. $20.00
E. $20.33
Firm V was worth $450 and Firm A had a market value of
$375. Firm V acquired Firm A for $425 because they thought
the combination of the new Firm VA was worth $925. What is
the synergy from the merger of Firm V and Firm A?
A. $50
B. $100
C. $475 Merger premium = $925 - ($450 + $375) = $100
D. $500
E. None of the above.
Firm A is planning on merging with Firm B. Firm A will pay
Firm B's stockholders the current value of their stock in shares
of Firm A. Firm A currently has 3,000 shares of stock
outstanding at a market price of $15 a share. Firm B has 1,000
shares outstanding at a price of $10 a share. What is the value
per share of the merged firm?
A. $10.00 Value per share = [(3,000 $15) + (1,000 $10)] [3,000 +
(1,000 $10 $15)] = $55,000 3,666.67 = $15
B. $15.00
C. $16.25
D. $20.00
E. $20.50
Firm V was worth $500 and Firm A had a market value of
$400. Firm V acquired Firm A for $450 because they thought
the combination of the new Firm VA was worth $1,000. What
is the NPV from the merger of Firm V and Firm A?
A. $0
B. $50
C. $400 Net Present Value = $1,000 - $500 - $400 - ($450 - $400) = $50
D. $450
E. None of the above.
Firm A is planning on merging with Firm B. Firm A will pay
Firm B's stockholders the current value of their stock in shares
of Firm A. Firm A currently has 3,000 shares of stock
outstanding at a market price of $15 a share. Firm B has 1,000
shares outstanding at a price of $10 a share. What is the value
of the merged firm?
A. $25,000 Value of merged firm = (3,000 $15) + (1,000 $10) =
$55,000
B. $45,000
C. $55,000
D. $60,000
E. None of the above
Turner, Inc. has $4.2 million in net working capital. The firm
has fixed assets with a book value of $48.6 million and a
market value of $53.4 million. Martin & Sons is buying
Turner, Inc. for $60 million in cash. The acquisition will be
recorded using the purchase accounting method. What is the
amount of goodwill that Martin & Sons will record on its
balance sheet as a result of this acquisition?
A. $0 Goodwill = $60m - ($4.2m + $53.4m) = $2.4m
B. $2.4 million
C. $6.6 million
D. $7.2 million
E. $11.4 million
