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Below is the information about a bidding firm (Firm Pos) and a target firm (Firm Tula). Assume that both firms are using all equity capital
Below is the information about a bidding firm (Firm Pos) and a target firm (Firm Tula). Assume that both firms are using all equity capital structure. Firm Pos has esimated that the incremental cashflow generated from acquiring Firm Tula is $11,900. Firm Pos Firm Tula 3550 Outstanding shares 5000 Price per share $50 $23 a. If firm Tula is willing to be acquired for $24.5 per share in cash, what is the NPV of the merger? What will the price per share of the merged firm? (10 points) b.) Suppose the firm Tula is aggreeable to a merger by an exchange of stock. If firm Pos offers one of its shares for every two of Tula's shares, what will the price per share of the merged firm be? What is the NPV of the merger
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