Answered step by step
Verified Expert Solution
Question
1 Approved Answer
As a financial analyst at Bank of America, you are analyzing the impact of the merger and acquisition on a company's financial performance. You collected
As a financial analyst at Bank of America, you are analyzing the impact of the merger and acquisition on a company's financial performance. You collected the following data Firm A Firm T Price per share $60.00 $15.00 Total earnings $600.00 $100.00 Share outstanding 200 80 Total Value $12,000.00 1,200.00 Suppose Company A will acquire Company T. Company A will offer two new share of A for every five shares of a. It investors are aware that there are no economic gains from the merger, what is the price-earninge ratio of A's stock after the merger? (sample answer: 27.60) b.Now suppose that the merger really does increase the value of the combined them by $1168, what in the price-earings ratio of A's stock after the merger? (sample answer: 27.60) c. Now suppose that the merger really does increase the value of the combined firms by $1155, What in the final merger premium in dollar does Company Apay to Company T (sample answer: $450,50) d. Now suppose that the merger really does increase the value of the combined firms by $1155, What is the initial merger premium promised in dollar does Company A pay to Company T (sample answer: $450.50)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started