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Question 11 - Consider the following information regarding the potential combination of an Offeror Company I and a Target Company C. Assume that both companies

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Question 11 - Consider the following information regarding the potential combination of an Offeror Company I and a Target Company C. Assume that both companies have no outstanding debt. Company I has estimated the synergistic benefits of acquiring Company C to be worth $1,500. a) If company C agrees to be purchased at a price of $15 per share in cash, what is the NPV of this acquisition? b) What would be the stock price of the merged company if the conditions in a) were accepted? c) In a), what is the merger premium? d) Suppose that company C is ready to accept a merger-acquisition by exchange of shares. If Company 1 offers three of its shares for a set of five shares of Company C, what will be the stock price of the resulting company? e) What is the NPV of the merger if the conditions stipulated in d) apply

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