| Bentley Corp. and Rolls Manufacturing are considering a merger. The possible states of the economy and each companys value in that state are shown here: *********E1 IS INCORRECT******** 
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Bentley Corp. and Rolls Manufacturing are considering a merger. The possible states of the economy and each company's value in that state are shown here: State Probability Bentley Rolls Boom .75 $308,000 $278,000 Recession 25 119,000 89,000 Bentley currently has a bond issue outstanding with a face value of $134,000. Rolls is an all-equity company. a. What is the value of each company before the merger? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Answer is complete and correct. $ Value of Bentley Value of Rolls 260,750 230,750 Is b. What are the values of each company's debt and equity before the merger? (Leave no cells blank - be certain to enter "O" wherever required. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Answer is complete and correct. $ 130,500 $ Equity of Bentley Debt of Bentley Equity of Rolls Debt of Rolls 130,250 230,750 $ $ 0 c. If the companies continue to operate separately, what are the total value of the companies, the total value of the equity, and the total value of the debt? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Answer is complete and correct. $ 491,500 Value of companies Value of equity Value of debt $ 361,250 130,250 $ d-1. What would be the value of the merged company? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Answer is complete and correct. Merged company value $ 491,500 d-2. What would be the value of the merged company's debt and equity? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Answer is complete and correct. Value of debt Value of equity $ $ 134,000 357,500 e-1. How much would shareholders gain or lose in the merger? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Enter a gain as a positive number and a loss as a negative number.) Answer is complete but not entirely correct. Shareholders' gain or $ 3,750 loss e-2. How much would bondholders gain or lose in the merger? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Enter a gain as a positive number and a loss as a negative number.) Answer is complete and correct. Bondholders' gain or $ 3,750 loss
