Sweet Cola Corp SCC is bidding to take over Salty Dog Pretzles SDP
SCC has 4,400 shares outstanding selling at $50 per share
SDP has 2,000 shares outstanding selling at $17.50 per share
SCC estimates the economic gain from the merger to be $27,000
A & B are correct. Need help with C,D,E and F
a. If SDP can be acquired for $20 a share, what is the NPV of the merger to SCC? b. What will SCC sell for, per-share, when the market learns that it plans to acquire SDP for $20 a share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What will SDP sell for? d. What are the percentage gains to the shareholders of each firm? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) e. Now suppose that the merger takes place through an exchange of stock. On the basis of the premerger prices of the firms, SCC sells for $50, so instead of paying $20 cash, SCC issues 0.40 of its shares for every SDP share acquired. What will be the price of the merged firm? (Do not round intermediate calculations. Round your answer to 2 decimal places.) f. What is the NPV of the merger to SCC when it uses an exchange of stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) X Answer is not complete. a. b. $ NPV Selling price Selling price SCC 22.000 55.00 per share 101 X per share % C. $ d. SDP % e. $ 100.71 X per share Price NPV f. a. If SDP can be acquired for $20 a share, what is the NPV of the merger to SCC? b. What will SCC sell for, per-share, when the market learns that it plans to acquire SDP for $20 a share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What will SDP sell for? d. What are the percentage gains to the shareholders of each firm? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) e. Now suppose that the merger takes place through an exchange of stock. On the basis of the premerger prices of the firms, SCC sells for $50, so instead of paying $20 cash, SCC issues 0.40 of its shares for every SDP share acquired. What will be the price of the merged firm? (Do not round intermediate calculations. Round your answer to 2 decimal places.) f. What is the NPV of the merger to SCC when it uses an exchange of stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) X Answer is not complete. a. b. $ NPV Selling price Selling price SCC 22.000 55.00 per share 101 X per share % C. $ d. SDP % e. $ 100.71 X per share Price NPV f
