Solution-What is the NPV of the acquisition under the cash

What is the NPV of the acquisition under the cash offer

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Reference no: EM133016805

Question - QUT Corporation is considering the acquisition of UQ Ltd. The values of the two companies as separate entities are $15 million and $7 million, respectively. QUT Corporation estimates that by combining the two companies it will reduce administrative costs by $180,000 per annum in perpetuity. QUT Corporation can either pay $8 million in cash for UQ, or offer UQ a 35 per cent holding in QUT. If the opportunity cost of capital is 15 per cent per annum. Your answer should be in millions and accurate to two decimal places (e.g., 10,500,000 should be entered as 10.50).

Required -

(a) What is the gain, in present value terms, from the merger?

(b) What is the net cost of the share alternative?

(d) What is the NPV of the acquisition under the share offer?

Reference no: EM133016805

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What is the NPV of the acquisition under the cash offer

Reference no: EM133016805

Reference no: EM133016805

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