Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Amazon's market capitalization increased by $11.34 billion on June 16, 2017.Noting that this increase was similar to the $13.7 billion purchase price, a CNBC reporter

  1. Amazon's market capitalization increased by $11.34 billion on June 16, 2017.Noting that this increase was similar to the $13.7 billion purchase price, a CNBC reporter argued that, "Amazon got Whole Foods essentially for free."

a. Did Amazon get Whole Foods "essentially for free"?How do you interpret the fact that Amazon's stock valuation increased by $11.34 billion on the day that its WFM acquisition was announced?

b. Suppose the increase in Amazon's stock valuation (by $11.34 billion) was due to its announced acquisition of WFM.By how much did investors think Amazon would be able to increase WFM's revenue growth and/or decrease costs?

2.Do you think Amazon overpaid for Whole Foods? Alternatively, should Whole Foods shareholders have demanded a higher price for their shares?

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

Multinational Business Finance

Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett

14th edition

133879879, 978-0133879872

More Books

Students also viewed these Finance questions