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Acquisition Assignment | Homework For You

  1. [Total 12 points] Firm B is willing to be acquired by firm A at a price of $36 a share in either cash or stock. The incremental value of the proposed acquisition is estimated at $80,000.Homework For You
  Firm A Firm B
Number of shares 40,000 12,000
Price per share $18.00 $31.00
Debt $0 $0
Earning $80,000 $48,000
  1. What is the value of firm B to firm A? What is the NPV of acquiring firm B if the merger is an all cash deal? (3 pts)
  1. What is the total amount of the merger premium if firm A acquires firm B in an all cash deal? What is the per share price of the post-merger firm AB if the merger is a cash deal? (3 pts)
  1. What is the value of firm AB if the merger is an all-stock deal? What is the price per share of firm AB if the merger is an all-stock deal? (3 pts)
  1. What is NPV of the merger of firm B by firm A in an all-stock deal? (3 points) Get Finance homework help today

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