Firm B Firm A $ Firm AB Price Per Share Total Earnings (millions) Shares Outstanding (millions of shares) Total Value (millions) 75 $ 40 $ 300 $ 200 200 60 $ 15,000 $ 2,400 $ 20,000 Firm A has...

Firm B<br>Firm A<br>$<br>Firm AB<br>Price Per Share<br>Total Earnings (millions)<br>Shares Outstanding (millions of shares)<br>Total Value (millions)<br>75 $<br>40<br>$<br>300 $<br>200<br>200<br>60<br>$ 15,000 $ 2,400 $ 20,000<br>Firm A has proposed to acquire Firm B at a price of $65 per share for Firm B's stock.<br>a) What is the NPV of the merger to Firm A? What is the NPV of the merger to Firm B?<br>b) What will be the post-merger price per share for Firm A's stock if Firm A pays in cash?<br>c) To make the value of a stock offer equivalent to a cash offer of $3,900 million, how many shares<br>should Firm A give to the owners of Firm B?<br>

Extracted text: Firm B Firm A $ Firm AB Price Per Share Total Earnings (millions) Shares Outstanding (millions of shares) Total Value (millions) 75 $ 40 $ 300 $ 200 200 60 $ 15,000 $ 2,400 $ 20,000 Firm A has proposed to acquire Firm B at a price of $65 per share for Firm B's stock. a) What is the NPV of the merger to Firm A? What is the NPV of the merger to Firm B? b) What will be the post-merger price per share for Firm A's stock if Firm A pays in cash? c) To make the value of a stock offer equivalent to a cash offer of $3,900 million, how many shares should Firm A give to the owners of Firm B?

Jun 06, 2022

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Firm B Firm A $ Firm AB Price Per Share Total Earnings (millions) Shares Outstanding (millions of shares) Total Value (millions) 75 $ 40 $ 300 $ 200 200 60 $ 15,000 $ 2,400 $ 20,000 Firm A has...

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