User Account

All Pages

Calculate the net present value of the acquisition

Assignment Help Accounting Basics
Reference no: EM133100948

Question - Makmur Bhd is currently evaluating a potential merger with Cahaya Bhd to accelerate the business growth. Makmur Bhd hired consultant to evaluate the viability of the merger exercise. The relevant information for each firm prior to the merger is provided as follows:

 

Makmur Bhd

Cahaya Bhd

Market price per share

RM 18

RM 12

Number of shares outstanding

30 million

10 million

The consultant estimates that the net present value of the anticipated synergy benefits is RM75 million. It also recommends a merger through the issuance of RM10 million units of shares in a merged firm in exchange for all units of shares of Cahaya Bhd. Both companies have no outstanding debt obligations.

Required -

(a) Determine the value of the combined firm if the merger take place.

(b) Calculate the premium that Makmur Bhd would have to pay for the acquisition.

(c) Calculate the net present value (NPV) of the acquisition to Makmur Bhd based on the proposed shares exchange.

(d) Based on your answer in (c) above, advise the shareholders of Makmur Bhd whether to vote for the merger or reject the recommendation.

Reference no: EM133100948

Questions Cloud

What would be the depreciation expense for the second year : Marlow Company purchased a point of sale system on January 1 for $5,500. What would be the depreciation expense for the second year
How does performance appraisal initiated : How Does Performance Appraisal Initiated And What Is The Impact In The Management?
Which of the given statements is true : Increase in future economic benefits related to an increase in an asset or an increase of a liability has arisen that can be measured reliably
What will happen to the firm current ratio : The King Carpet Company has $2,870,000 in cash and a total of $12,320,000 in current assets. What will happen to the firm current ratio
Calculate the net present value of the acquisition : Calculate the net present value (NPV) of the acquisition to Makmur Bhd based on the proposed shares exchange
What is the dividends per share figure : Nataro, Incorporated, has sales of $668,000, costs of $330,000, depreciation expense of $74,000, What is the dividends per share figure
What is the net income for this firm : Griffin's Goat Farm, Incorporated, has sales of $594,000, costs of $365,000, depreciation expense of $49,000, What is the net income for this firm
What is the company days sales in receivables : An accounts receivable balance of $106,394. Assuming 65 percent of sales are on credit, what is the company's days sales in receivables
What is the cost of goods sold for the company : Highly Suspect Corporation has current liabilities of $403,000, a quick ratio of 1.30, inventory turnover of 3.30, What is the cost of goods sold for company

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determine his deductible loss on the suv

If Sammy's AGI for the year is $100,000 before consideration the accident, determine his deductible loss on the SUV

  Determine annual gross income using the chart provided

Establish your spending categories. Remember, this is your money, so if donations to the Home for Retired Professors is a priority, be sure to include it.

  Determine the ending inventory cost

There are 80 units of the item in the physical inventory at December 31. Determine the ending inventory cost and the cost of goods sold by three methods

  Determine profit on consignment and cost of inventory

Determine profit on consignment and cost of inventory on consignment are? On June 1, Taiwan Sales Co. shipped 25 radio sets to India Store on consignment

  What is the firm profit margin

Question - A firm has a ROE of 14 percent and a debt-to-equity ratio of 40 percent. If the total asset turnover is 3.4, what is the firm's profit margin

  Calculate percentage tax due

Calculate Percentage Tax Due. P20,000 represents revenue from the first quarter and the balance of 80,000 represents receipts from income earned

  What were the benefits of adopting ifrss by reporting entity

The similarities and differences in the adoption of IFRSs faced by Australia and New Zealand . Include what factors had caused the differences you found

  Describes accounting for intangible assets

Describes accounting for intangible assets(other than goodwill) that have an indefinite useful life? They should be carried at fair value of the balance sheet

  What were the average unit costs of curve

Under an absorption costing system, what were the average unit costs of Curve and Slid during the current year? Showw appropriate supporting calculations

  Power point presentation on the boeing company

This is a paper and power point presentation on the Boeing Company. Please see attachment for specifications

  How did the financial crash impact

How did this financial crash impact you, your family, a career you may have been laid-off from, and/or someone you know that were affected?

  What cost per unit would Zing Zang Whizbang report

INDIRECT COST: Setup, production order and materials handling costs per batch $15,000. What cost per unit would Zing Zang Whizbang report for 2020

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd