CHAPTER_31 - CHAPTER 31 Mergers Answers to Problem Sets 1....

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 CHAPTER 31 Mergers Answers to Problem Sets 1. a. Horizontal b. Conglomerate c. Vertical d. Conglomerate. 2. a and d; c can also make sense, although merging is not the only way to redeploy excess cash. 3. a. $5 million (We assume that the $500,000 saving is an after-tax figure.) b. $4 million c. $7.5 million d. +$1 million e. -$2.5 million. 4. a, b. 5. a. True b. False c. False d. True e. False (They may produce gains, but “large” is stretching it.) f. False g. True 6. a. Any premium paid by the bidder over the book value of the target’s equity is reflected in the bidder’s balance sheet, e.g., it is shown as “goodwill.” b. The bidder offers to buy the target’s stock directly from its shareholders. c. The target’s stockholders can purchase additional shares at a
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 bargain price. d. A large block of stock is held by an unfriendly company. To keep its independence, the target firm is induced to repurchase the stock at a premium. e. The gain from combining two firms. 10.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/09/2011 for the course FNAN 522 taught by Professor Wilson during the Spring '11 term at University of Louisiana at Lafayette.

Page1 / 4

CHAPTER_31 - CHAPTER 31 Mergers Answers to Problem Sets 1....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online