Firm X has 100 shares outstanding at $20 per share. Firm Y also has 100 shares outstanding with a current price of $5 per share. Firm X offers Y's shareholders $8 per share in cash. Firm X's management expects the combined value of the firm to be $3,000. The expected gain and the NPV of the merger to X are, respectively, closest to: a) $500 and $300 b) $300 and $200 c) $500 and $200 d) $300 and $300
Firm X has 100 shares outstanding at $20 per share. Firm Y also has 100 shares outstanding with a current price of $5 per share. Firm X offers Y's shareholders $8 per share in cash. Firm X's management expects the combined value of the firm to be $3,000. The expected gain and the NPV of the merger to X are, respectively, closest to: a) $500 and $300 b) $300 and $200 c) $500 and $200 d) $300 and $300
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Firm X has 100 shares outstanding at $20 per share. Firm Y also has 100 shares outstanding with a current price of $5 per share. Firm X
offers Y's shareholders $8 per share in cash. Firm X's management expects the combined value of the firm to be $3,000. The expected
gain and the NPV of the merger to X are, respectively, closest to:
a) $500 and $300
b) $300 and $200
c) $500 and $200
d) $300 and $300](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fed0644f9-e0d1-4564-a787-1135447dac72%2Fc1c6249d-6045-4c48-8ef9-7068cc5d20cd%2Fqr1kvbg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Firm X has 100 shares outstanding at $20 per share. Firm Y also has 100 shares outstanding with a current price of $5 per share. Firm X
offers Y's shareholders $8 per share in cash. Firm X's management expects the combined value of the firm to be $3,000. The expected
gain and the NPV of the merger to X are, respectively, closest to:
a) $500 and $300
b) $300 and $200
c) $500 and $200
d) $300 and $300
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