Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following information for two all-equity firms, A and B: Firm A Firm B Total earnings $1,000 $400 Shares outstanding 100 80 Price per

Consider the following information for two all-equity firms, A and B:

Firm A

Firm B

Total earnings

$1,000

$400

Shares outstanding

100

80

Price per share

$80

$30

Firm A is acquiring Firm B by exchanging 25 of its shares for all shares in B

16. What is the equivalent cash cost of the merger if the merged firm is worth $11,000?

____

  1. $2,000
  2. $2,200
  3. $2,400
  4. $2,800

17. What is Firm As new P/E ratio after merger?

____

A) 8.76

B) 8.00

C) 7.86

D) 6.78

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

Fundamentals Of Multinational Finance

Authors: Michael Moffett

6th Global Edition

1292215216, 978-1292215211

More Books

Students also viewed these Finance questions

Question

1. Explain the purpose of performance appraisal.

Answered: 1 week ago