Shoop Ltd is considering the acquisition of Requim Inc. The values of Shoop Ltd is $13.8 million and Requim Inc is $8.8 million. Shoop Ltd estimates that by merging the two companies it will decrease expenses by $480000 per annum in perpetuity. Shoop Ltd can either pay $10.9 million cash for Requim Inc or offer Requim Inc a 50 per cent holding in Shoop Ltd. If the cost of capital is 10 per cent per annum: (a) What is the gain, in present value terms, from the merger? (Enter your answer in millions. Round your answer to 1 decimal place.) (b) What is the net cost of the cash offer? (Enter your answer in millions.) Net cost $ (c) What is the net cost of the share alternative? (Enter your answer in millions. Round your answer to 2 decimal places.) Net cost $ (d) What is the NPV of the acquisition under (Negative amounts should be indicated by a minus sign. Enter your answers in millions. Round your answers to 2 decimal places.): Cash-rich firms often make questionable acquisitions, rather than pay out the cash to shareholders. This: Multiple Choice is because diversification eliminates inefficiencies. is an example of the bootstrap game. is an example of an agency problem. is because diversification is too costly for individuals. Which type of takeover defence seeks the assistance of a 'white knight'? Multiple Choice acquisition by a friendly party disclosure of favourable information claims and appeals poison pill Poppy and Co, an icecream producer, has recently acquired control of Digi Ltd, a movie streaming company. This is an example of: Multiple Choice a horizontal takeover. a conglomerate takeover. a vertical takeover. None of the given options are examples of takeovers. Bobbo Ltd has decided to acquire a controlling interest in Koolo Co by purchasing Koolo Co's shares on the market. Which one of the following is correct? Multiple Choice Once Bobbo Ltd obtains 80 percent of Koolo Co's shares, the remaining Koolo Co shareholders will be required to sell their shares to Bobbo Ltd. Buying shares on market, may be more expensive than an outright merger. This method of acquisition guarantees a quick and efficient merger. Bobbo Ltd must obtain the approval of Koolo Co's board of directors before purchasing shares. Bobbo Ltd can only obtian up to 49 percent of the shares before having to obtain the approval of Koolo Co management