Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Company A purchases Company B. This is a 100% equity purchase which means that Company A acquires all of the Company B assets and assumes
Company A purchases Company B. This is a 100% equity purchase which means that Company A acquires all of the Company B assets and assumes the liabilities of Company B. Calculate the value of goodwill recognized in the acquisition. Round to the nearest whole dollar and do not include the dollar sign ($). Assume the current market value of tangible physical assets is $1,234,567 (determined by Company A as at the acquisition date) the current market value of the only identifiable intangible asset (a customer list) is $125,000 (determined by Company A as at the acquisition date) Operating (non-Financial) liabilities have an appraised value of $160,000 before and after the acquisition. Financial Liabilities were appraised by company B to be valued at $600,000 immediately Before the acquisition. Financial Liabilities were appraised by Company A to be valued at $495,000 immediately after the acquisition. There are no other assets or liabilities to consider than those presented above Company A paid $812,000 cash for Company B. The purpose of this calculation question is for you to compute the fair value of the financial liabilities of XYZ Company. XYZ Company has only 1 financial liability. It is a non-callable publicly traded bond. Here are your facts to input into this question: Maturity value of the bond = $280,000,000 Coupon Rate for the bond is 4.80% paid semi-annually. Bond matures on the last day of the firm's financial year. Last Financial Year end the yield to maturity was 4.38% based on doubling the periodic yield. Last Financial Year end - bond had exactly 18 years to maturity This Year Financial Year end - the yield to maturity demanded by the market is 5.68% (based on doubling the periodic rate) Required: Compute the fair value of the bond to be reported on this year's balance sheet. Round to the nearest dollar and do NOT include the dollar sign in your response
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started