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Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 89,000 $ 19,000 Shares outstanding 46,000 11,000 Pre-share values: Market $ 46 $ 17 Book $ 15 $ 6 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $4 per share, and that neither firm has any debt before or after the merger. a. Assuming the pooling of interests method is used, what is the equity of the combined firm? Equity value $ b. List the assets of the combined firm assuming the purchase accounting method is used. Assets from X $ Assets from Y Goodwill Total Assets XY $

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Financial Management, Finance

Category:- Financial Management
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