This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: MegaToy Inc is considering acquiring Action Figures Inc, both publicly traded firms in the toy ... (Read 30 times)

Alainaaa8

  • Hero Member
  • *****
  • Posts: 576
on: Jul 11, 2018
MegaToy Inc is considering acquiring Action Figures Inc, both publicly traded firms in the toy industry. Action Figures is currently trading at 18 per share and has 15 million shares outstanding.
 
  The executive team at MegaToy believes that the present value of potential synergies is 70 million if the firms combine. What is the highest bid price per share that MegaToy should consider paying for Action Figure shares? What is the largest percentage premium over the current share price MegaToy would be willing to pay?

Question 2

A spider is an example of a broad market exchange-traded fund.
 
  Indicate whether the statement is true or false


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

k2629

  • Sr. Member
  • ****
  • Posts: 357
Reply #1 on: Jul 11, 2018
Answer to Question 1

The value of Action Figures to MegaToy = 18/share  15,000,000 shares + 70,000,000 = 340,000,000. The maximum value per share is Value/the number of shares = 340,000,000/15,000,000 = 22.67. This is a (22.67 - 18.00 )/(18.00 ) = 25.93 premium over the current market price.

Answer to Question 2

TRUE


Alainaaa8

  • Member
  • Posts: 576
Reply 2 on: Jul 11, 2018
Great answer, keep it coming :)

gcook

  • Member
  • Posts: 343
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

Anti-aging claims should not ever be believed. There is no supplement, medication, or any other substance that has been proven to slow or stop the aging process.

Did you know?

Stevens-Johnson syndrome and Toxic Epidermal Necrolysis syndrome are life-threatening reactions that can result in death. Complications include permanent blindness, dry-eye syndrome, lung damage, photophobia, asthma, chronic obstructive pulmonary disease, permanent loss of nail beds, scarring of mucous membranes, arthritis, and chronic fatigue syndrome. Many patients' pores scar shut, causing them to retain heat.

Did you know?

In most climates, 8 to 10 glasses of water per day is recommended for adults. The best indicator for adequate fluid intake is frequent, clear urination.

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

The first documented use of surgical anesthesia in the United States was in Connecticut in 1844.

PHAGES IN ACTION PHAGES IN ACTION
Action of penicillinase Action of penicillinase
Action Potentials Action Potentials
Acquiring Weather Data Acquiring Weather Data
Summary of Drug Action: Common Routes of Administration Summary of Drug Action: Common Routes of Administration
Producer acquiring energy and nutrients from the environment Producer acquiring energy and nutrients from the environment
Video: Rh blood type and complications during pregnancy & Fertilization

For a complete list of videos, visit our video library