Company B (bidder) just completed a M&A project and the target was Company T. This project was an all cash deal. Prior to M&A, Company T had L-T-D outstanding of $ 450.

The balance sheet for Company B prior to M&A was given below:

CA

$ 100

CL

$ 60

FA

$ 1,200

L-T-D

$ 550

TA

$ 1,300

Equity

$ 690

TL + TE

$1,300

The balance sheet for Company BT post M&A was given below:

CA

$ 140

CL

$ 85

FA

$ 1,950

L-T-D

$ 1,285

Goodwill

$ 150

Equity

$ 870

TA

$ 2,240

TL + TE

$ 2,240

Q1

What was the total cost to Company B to consummate this deal ?

a. $ 760

b. $ 940

c. $ 840

d. $ 960

e. $ 860

Q2

How much additional L-T-D must be issued to finance this project?

a. $ 305

b. $ 365

c. $ 275

d. $ 265

e. $ 285