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PLEASE SHOW WORK AND DO NOT USE EXCEL Problem 2 : Consider the following premerger information about an acquiring firm (Firm A) and a target
PLEASE SHOW WORK AND DO NOT USE EXCEL
Problem 2 : Consider the following premerger information about an acquiring firm (Firm A) and a target firm (Firm T). Assume that neither firm has any debt outstanding. - "uryoss nave estimated that the dollar value of the synergy from the deal is $3,300. a. What is the value of Firm T to Firm A ? b. What is the NPV of the merger assuming that Firm T is willing to be acquired for $50 per share in cash?' c. If the merger does occur for $50 in cash, what will happen to the share price of Firm A? d. Suppose instead that A acquires T by paying 5 shares for every 6 shares in T. What will happen to the share price of A in this case? Is the cost of this alternative higher or lower than the cost of a $50 cash offerStep by Step Solution
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