Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(a) NY Corporation has 4,000,000 shares outstanding which is selling at $45 per share. It intends to acquire e-Build Corporation which has 2,500,000 shares outstanding,

image text in transcribed

(a) NY Corporation has 4,000,000 shares outstanding which is selling at $45 per share. It intends to acquire e-Build Corporation which has 2,500,000 shares outstanding, selling at $10 a share. NY Corporation estimates the economic gain from the merger to be $15,000,000. (i) Calculate the possible selling price of NY Corporation when the market learns that it plans to acquire e-Build Corporation for $15 a share. Moreover, calculate the percentage gains to the shareholders of NY Corporation. [15 marks] (ii) Suppose that the merger takes place through an exchange of stock. Based on the premerger prices of the firms, instead of paying $15 cash, NY Corporation issues 0.30 of its shares for every e-Build Corporation share acquired. Calculate the price of the merged firm. [15 marks]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Puzzling Auditing Puzzles

Authors: Janice P. Russell

1st Edition

0873894782, 978-0873894784

More Books

Students also viewed these Accounting questions

Question

=+ (a) Prove that I()(t)= fox'-1(log x)*e * dx.

Answered: 1 week ago

Question

Draw a labelled diagram of the Dicot stem.

Answered: 1 week ago

Question

b. Where did they come from?

Answered: 1 week ago

Question

c. What were the reasons for their move? Did they come voluntarily?

Answered: 1 week ago

Question

5. How do economic situations affect intergroup relations?

Answered: 1 week ago