0. Exercise 3.) M&A

Consider the following information for two all-equity firms, Firm Attrex and Firm Maliwan:

Attrex estimates that the value of the synergistic benefit from acquiring Maliwan is yearly positive Cash Flow of $1,085,000 in perpetuity. Maliwan has indicated that it would accept a cash purchase offer of $525.715 per share. Attrex is thinking about offering 38% of their shares in exchange. How should Attrex proceed?

Exercise 4.) WACC

The total book value of Attrexs equity is $192 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 12%. The firms bonds have a face value of $25 million and sell at a price of 108% of face value. The yield to maturity on the bonds is 4.9%, and the firms tax rate is 25%. Find the companys WACC.