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Company A is preparing a deal to acquire company B. One analyst estimated that the merger would produce 175 million dollars of annual cost savings, from operations, general and administrative expenses and marketing. These annual cost savings are expected to begin three years from now, and grow at 3% a year. In addition the analyst is assuming an after-tax integration cost of 0.25 billion, and taxes of 21%. Assume that the integration cost of 0.25 billion happens right when the merger is completed (year 0). The analyst is using a cost of capital of 9% to value the synergies. Company B's equity is trading at 4.3 B dollars (market value of equity). Company A is planning to pay a 32% premium for company B.
Problem a: Compute the value of the synergy as estimated by the analyst. Please show your calculations.
Problem b: Does the estimate of synergies in a) justify the premium that company A offered to company B?
When looking at an income tax disclosure on a 10k; what would it mean when you say "Make contingent liability" and "How to do tax savings"?
Prepare a worksheet to consolidate these two companies as of December 31, 2013 and prepare a 2013 consolidated income statement for Krause and Leahy - how would the consolidated statements change?
The audit team needs to gain an understanding of Cloud 9's structure and its business environment, determine materiality, and assess inherent risk.
Restate the entry for September 1, assuming the treasury shares were sold at $12 per share.
Explain why there are difference in the two approaches. Do you believe it is rational to have these differences in the two reporting entities?
Prepare the journal entry for the second semi-annual interest payment and amortization of the bond discount or premium using the straight line method.
midwest corp completed the following transactions in 2012 the first year of operation.1. issued 20000 shares of 10 par
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. If needed, use the minus sign to indicate cash outflows, negative amounts or a decrease in cash.
Calculate the total dividends paid on preferred shares up to the end of 2017 and the amount of the Retained Earnings at the end of 2017.
From an early investment, Jane can receive $1,000 at the end of the second year, $2,000 at the beginning of the fourth year, $3,000 at the beginning of the fifth year, and $4,000 at the end of the fifth year. (1) Draw a cash flow diagram to show Jane..
If a company sells multiple products, to calculate the breakeven point for each product, its unit contribution margin must be weighted by the sales mix?
Mussatto Corporation produces snowboards. The following per unit cost information is available: direct materials $12; direct labor $8; variable manufacturing overhead $6; fixed manufacturing overhead $14;
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