Chicago Savings Corp. is planning to make an offer for Ernie's Bank & Trust. The stock...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665228776758e_34266522876e9d62.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6652287824dbf_34366522877b2e70.jpg)
Transcribed Image Text:
Chicago Savings Corp. is planning to make an offer for Ernie's Bank & Trust. The stock of Ernie's Bank & Trust is currently selling for $58 a share. a. If the tender offer is planned at a premium of 50 percent over market price, what will be the value offered per share for Ernie's Bank & Trust? (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Value offered per share b. Suppose before the offer is actually announced, the stock price of Ernie's Bank & Trust goes to $75 because of strong merger rumors. If you buy the stock at that price and the merger goes through (at the price computed in part a), what will be your percentage gain? (Do not round intermediate calculations. Input the amount as a positive percent value rounded to 2 decimal places.) Percentage gain % c. Because there is always the possibility that the merger could be called off after it is announced, you also want to consider your percentage loss if that happens. Assume you buy the stock at $75 and it falls back to its original value after the merger cancellation. What will be your percentage loss? (Do not round intermediate calculations. Input answer as a positive value. Input your answer as a percent rounded to 2 decimal places.) Percentage loss % d. There is an 80 percent probability that the merger will go through when you buy the stock at $75, and only a 20 percent chance that it will be called off. d-1. Compute the expected value of the return on the investment. Assume the time period involved is short. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Expected value of return % d-2. Does this appear to be a good investment? Yes No Chicago Savings Corp. is planning to make an offer for Ernie's Bank & Trust. The stock of Ernie's Bank & Trust is currently selling for $58 a share. a. If the tender offer is planned at a premium of 50 percent over market price, what will be the value offered per share for Ernie's Bank & Trust? (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Value offered per share b. Suppose before the offer is actually announced, the stock price of Ernie's Bank & Trust goes to $75 because of strong merger rumors. If you buy the stock at that price and the merger goes through (at the price computed in part a), what will be your percentage gain? (Do not round intermediate calculations. Input the amount as a positive percent value rounded to 2 decimal places.) Percentage gain % c. Because there is always the possibility that the merger could be called off after it is announced, you also want to consider your percentage loss if that happens. Assume you buy the stock at $75 and it falls back to its original value after the merger cancellation. What will be your percentage loss? (Do not round intermediate calculations. Input answer as a positive value. Input your answer as a percent rounded to 2 decimal places.) Percentage loss % d. There is an 80 percent probability that the merger will go through when you buy the stock at $75, and only a 20 percent chance that it will be called off. d-1. Compute the expected value of the return on the investment. Assume the time period involved is short. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Expected value of return % d-2. Does this appear to be a good investment? Yes No
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
In January 2009 an investor purchased 800 shares of Engulf & Devour, a rapidly growing high-tech conglomerate. From 2009 through 2013, the stock turned in the following dividend and share price...
-
What three guidelines help management accountants provide the most value to managers? LO1
-
which has at least twenty shareholders True/False LO.1
-
A stock sells for $30. What is the value of a one-year call option to buy the stock at $25, if debt currently yields 10 percent? (Assume F(d1) and F(d2) = 1.)
-
Transcribed image text: Margo borrows $1500, agreeing to pay it back with 7% annual interest after 211 days. How much interest will she pay? $ Check
-
Please do in Excel: Prepare a classified Balance Sheet, dated 12-31-14, for these 3 situations: Situation 1 12-31-14 Assets: Cash . 75,000 Accounts Rec. ..... 184,000 Inventory .... 300,000...
-
What are the three critical components of vision? Provide one example of personal vision and one example of organizational vision. What are the four dimensions of MBTI?
-
What are the Operations conducted on Netflix in the Philippines? Kindly give statistics on what percentage is the improvement of Netflix.
-
What are behavioral choices and behavioral risk factors? What realms do healthy lifestyles fall into? Examples of national goals for healthy lifestyles/healthy behaviors.
-
What are 3 ways to engage the community in assessing a project after it is completed? What project issues do you believe have the biggest effect on time and cost? Why? What are some ways to avoid...
-
What is a complement? Consider Netflix and Tesla. What are the most important complements for these companies' products and services? Does the company supply it's own complements or does it rely on...
-
Cinematech Volume 2 - YouT x John Redcom - YouTube x Week 3: Quiz #1 in MyStatLal x Assignments X Do Homework - Go - Graded x + - C A...
-
For the week ended September 7, the totals of the payroll register for Hanson, Inc., are presented above. The regular and overtime earnings are correct. List six errors that exist. P.O. 3 Locate...
-
On January 21, the column totals of the payroll register for Regal Distributors showed that its sales employees had earned $13,620, its driver employees had earned $8,460, and its office employees...
-
For tax purposes, assume that the maximum taxable earnings are $62,700 for Social Security and $7,000 for the unemployment tax, and all earn ings are taxable for Medicare. For the payroll register...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App