Company C merge With company D Company C shares = $17, 6 mill outstanding Company D shares = $5,  2 mill outstanding Synergies from merge = $4 mill OFFER = COmpany C offers  1 of own share for 3 of Company D shares   Find NPV for company C if accepted

Renaldo Cross Company views share buybacks as treasury stock. Renaldo repurchased shares and then later sold the shares at more than their acquisition price. What is the effect of the sale of the treasury stock on each of the following? Retained earnings Total paid-in capital 1) no effect increase 2). no effect no effect 3). increase no effect 4). increase increase Option 2 Option 1 Option 3 Option 4

Chapter 2. 1.  On 12/31, Choco acquired all assets and liabilities of Cake by issuing 40,000 shares of its common stock when the market value (=fair value) is $32/share and this combination is a statutory merger (Cake was dissolved).  Choco has common stock with $15 par, 50,000 shares outstanding and Cake has $5 par, 60,000 shares outstanding   Choco Book Values Cake Book Values Cake Fair Values   Cash and Receivable 350,000 180,000 170,000   Inventories 250,000 100,000 150,000   Land 700,000 120,000 240,000   Building and equipment 600,000 600,000 900,000   Patented technology 100,000 0 60,000   Accounts payable 300,000 120,000 150,000   Long-term debt 0 400,000 350,000   Common stock 750,000 300,000     Additional paid in capital 500,000 60,000     Retained earnings 12/31 450,000 120,000     Revenues 350,000 160,000     Expenses 310,000…

4. The following table shows pre-merger data for ABC Company and XYZ, Inc.     ABC XYZ No of share outstanding 2,000,000 5,000,000 EPS $2.50 $4.00 Price per share $15.00 $60   a) Assume XYZ is taking over ABC by issuing one of its shares for four shares of ABC.  If there is no synergy, what would be the post-merger share price of XYZ? What would be the NPV of the merger? b) Assume there is synergy value of $4,200,000 created from the merger.  What would be the post-merger price per share of XYZ? What would be the NPV of the merger?           5. Lazos Company is in distress mainly due to its failure to adopt the current technology.  Creditors took Lazos to bankruptcy court and Lazos is fighting for a reorganization.  The following is its condensed balance sheet.   Book Value Market Value Current assets             $   120,000.00  $     100,000.00  Machinery                         200,000.00            150,000.00  Other fixed…