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The Chocolate Ice Cream Company and the Vanilla Ice Cream Company have agreed to merge and form Fudge Swirl Consolidated. Both companies are exactly alike
The Chocolate Ice Cream Company and the Vanilla Ice Cream Company have agreed to merge and form Fudge Swirl Consolidated. Both companies are exactly alike except that they are located in different towns. The endofperiod value of each firm is determined by the weather, as shown below. There will be no synergy to the merger. State Probability Value Rainy $ Warm Hot The weather conditions in each town are independent of those in the other. Furthermore, each company has an outstanding debt claim of $ Assume that no premiums are paid in the merger. aWhat are the possible values of the combined company? Do not round intermediate calculations and round your answers to the nearest whole number, eg Posibble states Joint value RainRain $ Rainwarm RainHot WarmWarm BWhat are the possible values of endofperiod debt and stock after the merger? Leave no cells blank be certain to enter wherever required. Do not round intermediate calculations and round your answers to the nearest whole number, eg Debt value Stock value RainRain Rainwarm RainHot WarmWarm WarmHot HotHot cHow much do stockholders and bondholders each gain or lose if the merger is undertaken? A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, eg Bondholder gainloss Stockholder gainloss
The Chocolate Ice Cream Company and the Vanilla Ice Cream Company have agreed to merge and form Fudge Swirl Consolidated. Both companies are exactly alike except that they are located in different towns. The endofperiod value of each firm is determined by the weather, as shown below. There will be no synergy to the merger.
State Probability Value
Rainy $
Warm
Hot
The weather conditions in each town are independent of those in the other. Furthermore, each company has an outstanding debt claim of $ Assume that no premiums are paid in the merger.
aWhat are the possible values of the combined company? Do not round intermediate calculations and round your answers to the nearest whole number, eg
Posibble states Joint value
RainRain $
Rainwarm
RainHot
WarmWarm
BWhat are the possible values of endofperiod debt and stock after the merger? Leave no cells blank be certain to enter wherever required. Do not round intermediate calculations and round your answers to the nearest whole number, eg
Debt value Stock value
RainRain
Rainwarm
RainHot
WarmWarm
WarmHot
HotHot
cHow much do stockholders and bondholders each gain or lose if the merger is undertaken? A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, eg
Bondholder gainloss
Stockholder gainloss
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