Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Firms A and B, both of which are 100% equity, are going to merge. Before the merger, Firm A (100 shares outstanding) is worth $15,000.

image text in transcribed
Firms A and B, both of which are 100% equity, are going to merge. Before the merger, Firm A (100 shares outstanding) is worth $15,000. Firm B ( 50 shares outstanding) is worth $10,000. The combined firm is worth $30,000. Firm A will pay $11,500 in cash for Firm B. What is the NPV of the merger to Firm A

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

International Financial Management

Authors: Cheol Eun, Bruce Resnick

5thEdition

0073382345, 9780073382340

Students also viewed these Finance questions

Question

Is there any evidence that contradicts this statement?

Answered: 1 week ago