Firm is planning to acquire firm

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Reference no: EM131867752

1. A company, has 12.5 million outstanding shares with a current market price of share € 25. The company has surplus cash of € 75 million. To distribute this surplus cash, the company announces repurchase of shares worth € 75 million at a market price of € 25. Assume that the company is able to purchase all the shares at a market price of € 25. Post share repurchase, the market price shall be closest to

a) € 19

b)  € 25

c) € 31

2. Firm A is planning to acquire Firm B. If Firm A prefers to make cash offer for the merger it indicates that:

A) Firm A's managers are optimistic about the post merger value of A

B) Firm A's managers are pessimistic about the post merger value of A

C) Firm A's managers are neutral about the post merger value of A

D) None

Reference no: EM131867752

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