Sample_Test_Question_Chapter_31

Sample_Test_Question_Chapter_31 - Sample test questions for...

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Sample test questions for Chapter 31 1. Andrews Co. has 500 shares outstanding at a market price per share of $26. Bitty Inc. has 200 shares outstanding at a market price of $13 a share. Neither firm has any debt. Andrews Co is acquiring Bitty Inc. The incremental (synergy) value of the acquisition is $212. What is the value of Bitty Inc. to Andrews Co.? a. $225 b. $227 c. $2,388 d. $2,600 E . $2,812 V B + synergy = (200 $13) + $212 = $2,812 2. AAA Ratings is acquiring B-minus Financial for $25,000 in cash. AAA Ratings has 15,000 shares of stock outstanding at a market value of $88 a share. B-minus Financial has 2,000 shares of stock outstanding at a market price of $11 a share. Neither firm has any debt. The synergy value of the acquisition is $10,000. What is the price per share of AAA Ratings’ stock after the acquisition? a. $88.00 b. $49.50 C . $88.47 d. $89.47 e. $79.53 Price per share of A = ( V A + NPV)/ N A = [(15,000 $88) + (2,000 $11) + $10,000 $25,000)] / 15,000 = $88.47 3. Acme Pianos and Badland Coyotes are all-equity firms. Acme Pianos has 30,000 shares outstanding at a price of $30 a share. Badland Coyotes has 1,500 shares outstanding at a market price of $74 a share. Acme Pianos is acquiring Badland Coyotes for $120,000 in cash. The synergy value of the acquisition is $40,000. What is the net present value of Acme Pianos acquiring Badland Coyotes? a. $9,000
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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.

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Sample_Test_Question_Chapter_31 - Sample test questions for...

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