Answered step by step
Verified Expert Solution
Question
1 Approved Answer
DSI agreed to merge with the CAE. The total acquisition price of $100 millions is going to be 50% financed issuing DSI's common shares to
DSI agreed to merge with the CAE. The total acquisition price of $100 millions is going to be 50% financed issuing DSI's common shares to CAE's shareholders and 50% financed with cash raised by DSI issuing long-term debt. (See below the balance sheet of both companies before the acquisition). The purchase method of accounting will be used to account for the merger (a taxable transaction in which the tax basis of the assets are going to be written -up in line with their book values). The fair market value of CAE's assets and liabilities are as follows: PP&E is $80m, current liabilities is $60m, and the remaining assets and liabilities did not change. DSI Balance Sheet (in millions) Current assets $450 Current liabilities $200 Other assets 100 Long-term debt 100 PP&E 500 Equity 750 Total $1,050 Total $1,050 CAE Balance Sheet (in millions) Current assets $10 Current liabilities $70 Other assets 30 Equity 20 PP&E 50 Total $90 Total $90 What is the value of the total assets of the merged firm? Give your answer in Million and without the $sign
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