Question
Cindys Computer Corp. is considering a merger with Bobbys Hard Drive, Inc. Cindys total operating costs of producing services are $5.4 million for a sales
Cindys Computer Corp. is considering a merger with Bobbys Hard Drive, Inc. Cindys total operating costs of producing services are $5.4 million for a sales volume (SC) of $48 million. Bobbys total operating costs of producing services are $4.5 million for a sales volume (SB) of $24 million.
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Calculate the average cost of production for the two firms. (Round your answers to 2 decimal places.)
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If the two firms merge, calculate the total average cost (TAC) for the merged firm assuming no synergies. (Round your answer to 2 decimal places.)
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Suppose, instead, that synergies in the production process result in a cost of production for the merged firms totaling $9.3 million for a sales volume of $72 million. Calculate the total average cost (ACCindyBobby) for the merged firm. (Round your answer to 2 decimal places.)
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
