(Answered) Q1 firm a has a total value of us10 million and firm b has

Accounting

Q1. Firm A has a total value of US$10 million and firm B has a total value of US$5 million. If the two firms merge, there will be a cost saving of US$2 million. Calculate any incremental gain from the merger.

Q2. An excerpt from the financial data of firms A and B is given below. Both firms have agreed to merge with firm B taking over firm A. The exchange ratio for the merger will be 1:3, meaning that the stockholders of A will receive 1 share of firm B in lieu of every 3 shares they currently hold in firm A.

Item Firm A Firm B

P/E Ratio US8.192 US16

Shares Outstanding 96,000 200,000

Earnings US250,000 US800,000

EPS US$2.6042 US4.00

It is estimated that the NPV from the acquisition will be zero, meaning that the benefits and costs of the merger will be equal.

Using the presented information, comment on whether the merger will lead to a growth in earnings for the combined firm.

View complete question

Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92383039
Price:- $20

Verified Expert

Priced at $40 Now at $20, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Accounting Basics

Assessment task individual reflective pieceindividual

Assessment task: Individual Reflective Piece Individual Responsible Leadership Model For your individual assignment, you are required to submit a reflective piece. In your write-up you should include the following requir ...

Question - accounting ninja incorporateds income statement

Question - Accounting Ninja Incorporated's Income Statement showed the following relvant data for thwe year ended December 31, 2017: Sales revenue - $207037 CPGS - $121277 Income from continuing operations - $253838 Loss ...

Question to make your decision you should use research and

Question: To make your decision you should use research and clearly lay out the facts and assumptions. You should then use the tools like IRR, NPV, TVM, Ratio Analysis, etc to analyze the facts. Finally, make a closing s ...

Question - mary is employed by a large public company in

Question - Mary is employed by a large public company. In 2017, she was granted options to acquire 1,000 shares of her employer's common stock at a price of $23 per share. At the time the options were granted, the shares ...

Business report assignment - to complete it students will

Business Report Assignment - To complete it, students will be provided with an Australian publicly listed company where they will be required to conduct financial statement analysis. Task Information - You have randomly ...

Question - explain the process of closing the books and

Question - Explain the process of closing the books and describe the content and purpose of a post-closing trial balance.

Question - community health center chc is considering

Question - Community Health Center (CHC) is considering spending fifty thousand dollars on a blood analyzer. The annual cash profits from the machine will be seven thousand dollars for each of the seven years of its usef ...

Question - an employee of a board of education is paid an

Question - An employee of a Board of Education is paid an annual salary in 22 bi-weekly payments of $1237.96 each. The employee is under contract for 200 workdays of 8 hours each. (a) What is the hourly rate of pay? (b) ...

Question - jessicas aunt died and left her a house and some

Question - Jessica's aunt died and left her a house and some money to her and 2 of her siblings. Jessica has four siblings total. Although 2 of her siblings were not listed as beneficiaries, they have agreed to split all ...

Question - randolph company has two departments department

Question - Randolph Company has two departments (Department A and Department B) for Job #111. As cost drivers used to apply overhead to products, the Department A uses machine-hours and the Department B uses direct labor ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Accounting Basics Expert