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QUESTION 1 Agway Company has 37,500 shares outstanding at a market price per share of $29.60. Berkshire Company has 155,000 shares outstanding at a market
QUESTION 1
- Agway Company has 37,500 shares outstanding at a market price per share of $29.60. Berkshire Company has 155,000 shares outstanding at a market price of $48 a share. Neither firm has any debt. Berkshire is acquiring Agway for $1,232,000 in cash. What is the merger premium per share?
- $2.75
- $3.00
- $3.25
- $3.50
- $3.75
10 points
QUESTION 2
- GenCorp and Harsco are all-equity firms. GenCorp has 62,000 shares outstanding at a market price of $54.70 a share while Harsco has 48,000 shares outstanding at a price of $42.50 a share. GenCorp is acquiring Harsco for $2,220,000 in cash. The incremental value of the acquisition is $374,000. What is the net present value of acquiring Harsco to GenCorp?
- $169,000
- $178,000
- $185,000
- $194,000
- $202,000
10 points
QUESTION 3
- The acquisition of a firm in the same industry as the bidder is called a _____ acquisition.
- conglomerate
- forward
- backward
- horizontal
- vertical
10 points
QUESTION 4
- Lincoln Corporation is acquiring Marathon Corporation for $1,680,000 in cash. Lincoln has 60,000 shares of stock outstanding at a market value of $61.80 a share. Marathon has 33,000 shares of stock outstanding at a market price of $45.40 a share. Neither firm has any debt. The net present value of the acquisition is $156,000. What is the price per share of Lincoln after the acquisition?
- $64.40
- $63.92
- $63.54
- $62.98
- $62.61
10 points
QUESTION 5
- Johnson Company is acquiring Kellogg Company for $1,310,000 in cash. Johnson has a current market value of $1,792,000 while Kellogg s current market value is $1,156,000. The synergy value from the acquisition is $218,000. What is the value of Johnson after the acquisition?
- $1,829,000
- $1,856,000
- $1,871,000
- $1,894,000
- $1,912,000
10 points
QUESTION 6
- Cintas and Delphi are all-equity firms. Cintas has 24,500 shares outstanding at a market price of $41.70 a share. Delphi has 50,000 shares outstanding at a price of $63 a share. Delphi is acquiring Cintas for $1,092,000 in cash. The synergy of the acquisition is $149,000. What is the value of Cintas to Delphi?
- $1,170,650
- $1,202,750
- $1,241,650
- $1,273,250
- $1,297,350
10 points
QUESTION 7
- Nacco Corporation has market value of $2,870 while Omnicom has a market value of $4,120. Omnicom is merging with Nacco and expects the combined firm to have a market value of $7,780. If the current Nacco shareholders obtain $3,120 of equity in the new firm, how much synergy was allocated to the Omnicom shareholders?
- $260
- $180
- $420
- $540
- $0
10 points
QUESTION 8
- A proposed acquisition may create synergy by doing all of the following except:
- increasing the market power of the combined firm.
- improving the distribution network of the acquiring firm.
- reducing the acquiring firm s distribution costs.
- reducing the utilization of the acquiring firm's assets.
- providing the combined firm with a strategic advantage.
10 points
QUESTION 9
- Ecolab and Ferro are all-equity firms. Ecolab has 185,000 shares outstanding at a market price of $39.60 a share. Ferro has 590,000 shares outstanding at a price of $68.30 a share. Ferro is acquiring Ecolab for $8,140,000 in cash. The synergy value of the acquisition is $1,427,000. What is the net present value of acquiring Ecolab to Ferro?
- $568,000
- $580,000
- $591,000
- $602,000
- $613,000
10 points
QUESTION 10
- Perot is planning on merging with Rockwell. Perot currently has 75,000 shares of stock outstanding at a market price of $47.20 a share. Rockwell has 61,000 shares outstanding at a price of $31.30 a share. The merger will create $330,000 of synergy. How many of its shares should Perot offer in exchange for all of Rockwell's share if it wants its acquisition cost to be $2,140,000?
- A. 43,628
- B. 44,102
- C. 44,510
- D. 44,866
- E. 49,120
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