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solve in 45 mins I will give you thumb up Question 3 Firm A plans to acquire Firm 3 through a merger. The pre-merger information

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solve in 45 mins I will give you thumb up

Question 3 Firm A plans to acquire Firm 3 through a merger. The pre-merger information for the two firms is as follows: Note 1: Only Firm A will be in operation after the merger, and Firm B will no longer exist after firms will be merged into one "new" Firm A. Note 1: Only Firm A will be in operation after the merger, and Firm B will no longer exist after the merger, so that the two firms will be merged into one "new" Firm A. Note 2: Firm A will take all the debts of Firm B after the merger. a). Assume that Firm A will issue debt only to acquire Firm B. Please estimate the Debt, Equity, and D/E ratio for the combined firm (the new Firm A) after the merger. [20Marks] b). Assume that Firm A will issue debt only to acquire Firm B. Please estimate the levered beta for the combined firm (the new Firm A) after the merger. [40 Marks] c). Assume that Firm A will issue equity only to acquire Firm B. Please estimate the levered beta for the combined firm (the new Firm A) after the merger. d) Should the combined fimis levered beta hioher Q2.3 or in Q2.2? Why

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