Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1

Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1 million shares outstanding. Big Fish expects a discounted synergistic value of $1 million from the merging of operations of the two firms. If Big Fish issues $2.2 million worth of shares to Little Fish's shareholders, what is the NPV of the acquisition? Round your answer to the nearest dollar.

$655,738

$144,262

$1,344,262

$823,524

$800,000

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

Contemporary Business Mathematics with Canadian Applications

Authors: S. A. Hummelbrunner, Kelly Halliday, Ali R. Hassanlou, K. Suzanne Coombs

11th edition

134141083, 978-0134141084

More Books

Students also viewed these Finance questions

Question

Explain the role of intermediate result variables.

Answered: 1 week ago