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I need to prepare for my 3rd exam. Can you help me solve this with work shown so I can study it please? 1. Styles

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I need to prepare for my 3rd exam. Can you help me solve this with work shown so I can study it please?

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1. Styles Consider the following information for two all-equity financed firms A and B. Firm A Number of shares Firm B 2,000 Price per share 6,000 $40 $30 Firm A estimates that the value of synergy from acquiring B is $6,000. Firm B has indicated it would accept a cash purchase offer of $35 per share. What is the merger premium? Calculate the NPV to acquire firm B. Should Firm A proceed? (6 points) 2. A Bidder firm has market value of $22,000,000. A Target firm has market value of $8,800,000. The Bidder estimates that the value of synergy from merging with the Target is $5,312,500. The Bidder is considering offering the Target either 35% stock or $12,000,000 in cash for the acquisition. What is the value of the Target to the Bidder? b. What is the cost of the cash acquisition? C. What is the cost of the stock acquisition? What is the NPV of the cash acquisition? e. What is the NPV of the stock acquisition? (7 points) I 3. Harrods has a market value of $1 10 million and 5 million shares outstanding. Selfridge has a market value of $34 million and 2 million shares outstanding. Harrods is contemplating acquiring Selfridge. Harrods' CFO has concluded that the combined firm | with synergy will be worth $157 million and Selfridge can be acquired at a premium of $4 million. a. If Harrods offers 1.2 million shares of stock in exchange for the 2 million shares of Selfridge, what will Harrods price be after the acquisition? b. What is the NPV of the stock acquisition? C. What exchange ratio between the two stocks would make the value of a stock offer equivalent to a cash offer of $38 million (value of Selfridge plus $4 million premium)

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