What is the npv of the stock offer

Assignment Help Finance Basics
Reference no: EM133060745

What is the NPV of the stock offer?

Penn Corp. is analyzing the possible acquisition of Teller Company. Both believes the acquisition will increase its total aftertax annual cash flow by $1,011,647.58 indefinitely. The current market value of Teller is $22,281,882 and that of Penn is $66,238,399. The appropriate discount rate for the incremental cash flow is 12.1%. Penn is trying to decide whether it should offer 30% of its stock or $31,173,286 in cash to Teller's shareholders.

HINT: Subtract the equity cost (as computed in the previous problem) from the value of the combined firm.

Reference no: EM133060745

Questions Cloud

The international system- fact-fiction or made-up-stuff : What are the fundamental strengths and weakness of polarity as a tool of explanation for how the international system works?
Compute the npvs of the two projects : You are analyzing two mutually exclusive projects with the cash flows shown below. The cash flows are in millions. Both projects are equally risky.
Construct an example of a sunk cost : What is a sunk cost? Under what circumstances, if any, are sunk costs relevant to a decision? Construct an example of a sunk cost
Compute the price for bond : Compute the price for each bond. The current yield to maturity (YTM) for each bond is 8%.
What is the npv of the stock offer : Penn Corp. is analyzing the possible acquisition of Teller Company. Both believes the acquisition will increase its total aftertax annual cash flow by $1,011,64
Create the shareholder of big corp : Big Corp is planning to fully acquire Small Corp. Big Corp currently has 10 million shares outstanding with a share price of $50 and total outstanding debt of $
What is the amount shown for capital assets : Examine reconciliation between governmental fund balances and governmental-type activities net position. What is the amount shown for capital assets
What is the amount of earnings accretion : What is the amount of earnings accretion/(dilution) per share in year 1, given the information below? Details:
World view of term culture and community : Discuss how the course has affected your world view of the term "culture/community."

Reviews

Write a Review

Finance Basics Questions & Answers

  What is a corporate bond

What is a corporate bond and what does it do in the world of finance?

  Discuss with the aid of a demand and supply diagram

Discuss with the aid of a demand and supply diagram the effects on consumers and producers when the government produces an indirect tax on a good.

  Speculate as to whether or not the agency conflict discussed

Fin 534- Speculate as to whether or not the agency conflict discussed in the scenario could become a roadblock to your conclusions. Provide a rationale for your response.

  What is this contract worth today at a discount rate

What is this contract worth today at a discount rate of 8.7 percent?

  Evaluate and comment on both the earnings quality and the

consider the following while accrual accounting information is imperfect ignoring it and making cash flows the basis

  What is the firms effective tax rate on operating income

Testing Relationships in Reformulated Income Statements (Medium) Fill in the missing numbers, indicated by capital letters, in the following reformulated.

  Estimate the number of common shares outstanding

Why is there a distinction among income from continuing operations, income from discontinued operations, and income from extraordinary items?

  How would cotton bolls hedge the transactions with shekel

Show time lines illustrating each transaction. How would Cotton Bolls hedge these transactions with $/shekel and $/S$ futures contracts?

  Components of commercial property coverage

Discuss in details the components of commercial property coverage, including real property, personal property, business interruption

  Calculate the var and es for a confidence level

Calculate the VaR and ES for a confidence level of 98% and a time horizon of three months.

  Assuming the expectations hypothesis

Assuming the Expectations Hypothesis is correct, and given the following information:

  Difficulties in organizing a casebook

What are some of the difficulties which can be present when organizing the casebook?

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!

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