Question 38

1 Point

Which form of payment would Firm B and Firm T prefer?

Firm B would prefer Cash, Firm T would prefer Stock

Firm B would prefer Stock, Firm T would prefer Cash

Both Firms would prefer Cash

Both Firms would prefer Stock

Question 37

1 Point

What is the NPV of the merger for Firm B if they purchase Firm T using Shares?

$6,000

$12,000

$18,000

$24,000

Question 36

1 Point

What is the Price per Share of the Merged Firm if Firm B purchases Firm T using Shares?

$15.00

$15.60

$16.80

$23.00

Question 35

1 Point

What is the Value of the Merged Firm if Firm B purchases Firm T using Shares?

$156,000

$174,000

$270,000

$294,000

Question 34

1 Point

What is the NPV of the merger for Firm B if they purchase Firm T using Cash?

$6,000

$12,000

$18,000

$24,000

Consider the following Pre-Merger information about a Bidding Firm (Firm B) and a Target Firm (Firm T). Assume that both firms have no debt outstanding:

	Firm B	Firm T
Shares Outstanding	10,000	6,000
Price per Share	$15	$20

Firm B has estimated that the present value of the synergistic benefits from acquiring Firm T is $24,000 and that it can acquire firm T for $23/share in an all cash deal OR by offering 1.25 shares of B for each share of T (i.e. B will issue new shares).