I just need problem 28-9 and 16-9 translated into excel document. answers are already there for each problem just need them in excel.

Problem 28-9 on Acquisition Analysis Based on Chapter 28 Mergers and Acquisitions (Excel file included) Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $40. You are thinking of buying TargetCo, which has earnings per share of $2, 1 million shares outstanding, and a price per share of $25. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. a) If you pay no premium to buy TargetCo, what will your earnings per share be after the merger? Target Shares are shipper than my Company. Then I will expend less cash than I will gain from my Company Share sale. Shares: 1,000,000 My Company price: $40 Target Price: $25 Then, for calculating the total of shares to be issued to buy 1,000,000 shares 1,000,000 * 25/40 = 625,000 (this is the quantity of share that I need to issue for buying 1,000,000 Target Shares. My Company has 1,000,000 and $4 per share = 4,000,000 Target has 1,000,000 and $2 per share = 2,000,000 Total earning will be 4,000,000 + 2,000,000 = 6,000,000 Total shares will be 1,000,000 + 625,000 = 1,625,000 For calculating the new earning per share 6,000,000 / 1,625,000 = $3.69 Answer: the earning per share will be $3.69 per share b) Suppose you offer an exchange ratio such that, at current preannouncement share prices for both firms, the offer represents a 20% premium to buy TargetCo. What will your earnings per share be after the merger? Price would be $25 * (1+0.20) = 25*1.20 = $30 Then, using the same formula: 1,000,000*30/40 = 750,000 Using again the same formula: 6,000,000/1,000,000+750,000=6,000,000/1,750,000 Answer: the earning per share would be $3.43 per share c) What explains the change in earnings per share in part a)? Are your shareholders any better or worse off? In my opinion the change in earning per share is because my company issued shares for buying new share from Target with a little increasing in price if we compare it with the earning per share. At the end I cannot say if my shareholders are better or worse because I need to wait at least until one year. Now the only that I did was issue and buy new shares. The result will be in depend of how much Target will obtain the Earning at the end of the period. d) What will your price-earnings ratio be after the merger (if you pay no premium)? How does this compare to your P/E ratio before the merger? How does this compare to TargetCo's premerger P/E ratio? Before the merger: My Company: P/E = (40*1,000,000) / (4*1,000,000) P/E = 40,000,000/4,000,000 P/E = 10 times Target P/E = (25*1,000,000) / (2*1,000,000) P/E = 25,000,000 / 2,000,000 P/E = 12.5 times After the merger: P/E = [(40*1,000,000)+(25*1,000,000)] / [(4*1,000,000)+(2*1,000,000)] P/E = (40,000,000+25,000,000) / (4,000,000 + 2,000,000) P/E = 65,000,000 / 6,000,000 P/E = 10.83 times Answer: the Price-Earning Ratio after merger is 10.83 times. It will be greater than my Company before merger and it will be lower than Taget before the merger. Problem 16-8 on Managerial Decision Based on Chapter 16 Financial Distress, Managerial Incentives, and Information (Excel file included) As in Problem 1, Gladstone Corporation is about to launch a new product. Depending on the success of the new product, Gladstone may have one of four values next year: $150 million, $135 million, $95 million, or $80 million. These outcomes are all equally likely, and this risk is diversifiable. Suppose the risk-free interest rate is 5% and that, in the event of default, 25% of the value of Gladstone's assets will be lost to bankruptcy costs. (Ignore all other market imperfections, such as taxes.) a) What is the initial value of Gladstone's equity without leverage? Initial Value=[(150M+135M+95M+80M)/(1+0.05)]*0.25 Initial Value =( 460M/1.05)*0.25 Initial Value = $109.52M Answer: the initial value is $109.52 M Now suppose Gladstone has zero-coupon debt with a $100 million face value due next year. b) What is the initial value of Gladstone's debt? Initial Value=[(100M+100M+95M*0.75+80*0.75)/(1+0.05)]*0.25 Initial Value = (100M+100M+71.25M+60M)/(1+0.05)*0.25 Initial Value = 331.25/1.05*0.25 Intial Value = 78.87M c) What is the yield-to-maturity of the debt? What is its expected return? YTM = (100/78.87) - 1 = 0.2679 = 26.79% Expected Return = {[(100M+100M+95M+80M)/78.87]*0.25}-1 Expected Return = (331.25/78.87*0.25)-1 Expected Retunr =4.20*0.25 - 1 Expected Return = 1.05-1 Expected Return = 0.05 = 5% Answer: The Yield-to-Maturity of the debt is 12% and the Expected Return is 5% d) What is the initial value of Gladstone's equity? What is Gladstone's total value with leverage? Initial Value of Equity = {[(150-100)+(135-100)+(0)+(0)]/1.05}*0.25 Initial Value of Equity = (85/1.05)*0.25 Initial Value of Equity = 80.95*0.25 Initial Value of Equity = 20.24M Total Value of Leverage = 89.28+20.24 = 109.52 M Suppose Gladstone has 10 million shares outstanding and no debt at the start of the year. e) If Gladstone does not issue debt, what is its share price? Share price = 109.52/10 Share Price = $10.95 per share f) If Gladstone issues debt of $100 million due next year and uses the proceeds to repurchase shares, what will its share price be? Why does your answer differ from that in part e)? Share price = 99.11 / 10 Share price = 9.91 per share The answer is different because in this case the stockholders are assuming the financial cost of this new situation and that means that the share price will be less. Problem 16-9 on Financial Distress Based on Chapter 16 Financial Distress, Managerial Incentives, and Information Kohwe Corporation plans to issue equity to raise $50 million to finance a new investment. After making the investment, Kohwe expects to earn free cash flows of $10 million each year. Kohwe currently has 5 million shares outstanding, and it has no other assets or opportunities. Suppose the appropriate discount rate for Kohwe's future free cash flows is 8%, and the only capital market imperfections are corporate taxes and financial distress costs. a) What is the NPV of Kohwe's investment? NPV = (10M/0.08) - 50M NPV = 75M b) What is Kohwe's share price today? Share Price = 75M/5M = $15 per share Suppose Kohwe borrows the $50 million instead. The firm will pay interest only on this loan each year, and it will maintain an outstanding balance of $50 million on the loan. Suppose that Kohwe's corporate tax rate is 40%, and expected free cash flows are still $10 million each year. c) What is Kohwe's share price today if the investment is financed with debt? Share Price = (75+0.40*50)/5 Share Price = $19 per share Now suppose that with leverage, Kohwe's expected free cash flows will decline to $9 million per year due to reduced sales and other financial distress costs. Assume that the appropriate discount rate for Kohwe's future free cash flows is still 8%. d) What is Kohwe's share price today given the financial distress costs of leverage? Share Price = [(9/0.08)-50+0.40*50]/5 Share Price = (112.50-50+20)/5 Share Price = 82.50/5 Share Price = $16.50 per share