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Namath Beverage is considering buying Vick Cocktails. Namath is currently trading at $25 per share and has 100,000 shares outstanding. Vick is currently valued at $1.4 million. Both firms are all equity. Namath believes the deal will create an additional $54,000 in incremental cash flows per year indefinitely and estimates the appropriate discount rate for the incremental cash flows to be 9%. Namath is considering offering $1.9 million in cash or 40% of its stock for Vick.
A) What percentage of the synergy do Namath shareholders receive in the cash offer?
B) What percentage of the synergy do Namath shareholders receive in the stock offer?
C) Assuming both offers would be successful, which offer should Namath make?
Suppose that a health care organization had revenues of $300,000 for March and that the payer mix is as follows: PAYER PERCENT OF PATIENTS PAYMENT LAG Medicare 40 3 months Medicaid 20 3 months Blue Cross 15 2 months Other insurer 15 1 month Self-pay ..
Mr. Belotti suggests financing the acquisition totally by selling a series of bonds with after tax and flotation cost of 8% (this is net yield to maturity).
After reading this chapter, it isn't surprising that you're becoming an investment wizard. With your new profound expertise, you purchase 100 shares of KSU Corporation for $37 per share. Over the next 12 months assure the price goes up to $45 per sha..
Tremont Designs is considering replacing one of its machines. With relation to the cash flows associated with this replacement, what is/are the:
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Which of the following bonds is trading at a premium?
We are evaluating a project that costs $1,180,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 66,000 units per year. Calculate the best-case an..
Which of the following is true regarding Investment Banks? When Glass-Steagal was repealed in 1999, commercial banks and Investment banks had to be separate entities.
Keller Cosmetics maintains an operating profit margin of 8.60% and a sales-to-assets ratio of 3.10. It has assets of $620,000 and equity of $420,000. Interest payments are $42,000 and the tax rate is 35%. a. What is the return on assets? What is the ..
What are three to four line items that appear on an organization's balance sheet? What significance do these items have for the organization?
What is the probability that the 100 randomly selected apples have a mean weight less than 12.5 ounces? How many of apples have weights between 13 ounces and 15 ounces?
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