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What would be the total assets for the new company xy

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Consider Firm X and Y. The firm had total earnings of $300,000 and Shares outstanding of 145,000. Firm X per-share market value is 130.5. Firm X per-share book value is $59.625. Firm Y had total earnings of $1,000,000 and Shares outstanding of 104500. Firm Y per-share market value is $298.5. Firm Y per-share book value is $65.375.

Problem a. Assume that Firm X acquires Firm Y by issuing long-term debt to purchase all the shares outstanding at a merger premium of $3.875. Assuming that neither firm has any debt before the merger, what would be the total assets for the new company XY.


Problem b. Assume that Firm Y acquires Firm X by issuing long-term debt to purchase all the shares outstanding at a merger premium of $5.875. Assuming that neither firm has any debt before the merger, what would be the total assets for the new company YX.

Reference no: EM132889013

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