This is my second time asking for help on this question. Previous answers on Che

Question

This is my second time asking for help on this question. Previous answers on Chegg are incorrect.

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding.

Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,600.

If Firm T is willing to be acquired for $20 per share in cash, what is the NPV of the merger?

What will the price per share of the merged firm be assuming the conditions in (a)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

If Firm T is willing to be acquired for $20 per share in cash, what is the merger premium?

Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every two of T's shares, what will the price per share of the merged firm be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What is the NPV of the merger assuming the conditions in (d)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

This is my second time asking for help on this question. Previous answers on Chegg are incorrect.

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding.

Explanation / Answer

(a) If Firm T is willing to be acquired for $20 per share in cash, what is the NPV of the merger? Cost of acquisition of firm T(1400*20) $28000 Market value of firm T(1400*18) $25200 Incremental cost by acquisition of firm T $2800 Synergistic benefits from acquiring Firm T is $9,600 NPV $6800 (b) What will the price per share of the merged firm be assuming the conditions in (a)? Market value of firm B (6200*$48) $297600 Market value of firm T(1400*$18) $25200 Add: synergy benfits $9600 Total value after acquisition (A) $332400 No of shares after acquisition(6200)(B) 6200 price per share after merger=A/B i.e 53.61 53.6129032258 (c) If Firm T is willing to be acquired for $20 per share in cash, what is the merger premium? Cost of acquisition of firm T(1400*20) $28000 Market value of firm T(1400*18) $25200 merger premium $2800 (d) Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every two of T's shares, what will the price per share of the merged firm be? No of shares of T=1400 for every 2 shares 1 share of B will give so 1400*1/2=700 shares of B Price per share of merged firm Market value of firm B (6200*$48) $297600 Market value of acquisition firm(700*$48) $33600 Add: synergy benfits $9600 Total value of B aafter merger $340800 Total no of shares(6200+700) 6900 Price per share $340800/6900= 49.39 49.3913043478 e What is the NPV of the merger assuming the conditions in (d)? Cost of acquisition firm(700*$48) $33600 Market value of firm T(1400*18) $25200 Incremental cost by acquisition of firm T $8400 Synergistic benefits from acquiring Firm T is $9,600 NPV $1200

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