1. Assume that the following balance sheets are stated at book value.

   Bidder Co.
   Current assets	$	11,650	Current liabilities	$	5,000
   Net fixed assets		39,000	Long-term debt		16,950
   			Equity		28,700
   Total	$	50,650	Total	$	50,650

   Target, Inc.
   Current assets	$	4,500	Current liabilities	$	2,710
   Net fixed assets		15,000	Long-term debt		8,090
   			Equity		8,700
   Total	$	19,500	Total	$	19,500

   Suppose the fair market value of Targets fixed assets is $19,900 versus the $15,000 book value shown. Bidder pays $24,900 for Target and raises the needed funds through an issue of long-term debt.

   What is the post-merger long-term debt?

   		8090
   		16950
   		25040
   		41850
   		49940

2 points

QUESTION 9

1. Using the same information provided in the previous question, please answer the following question:

   What is the goodwill created for acquiring firm?

   		300
   		400
   		500
   		600
   		700