Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Question
Chapter 26, Problem 2QP
Summary Introduction
To construct: The post-merger balance sheet for Company X.
Introduction:
A merger is the total absorption of one company by another, where the firm that is acquiring retains its uniqueness and it terminates the other to exist as an individual entity.
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Consider the following premerger information about Firm X and Firm Y:
Firm X
Firm Y
Total earnings
$
95,000
$
22,000
Shares outstanding
52,000
17,000
Pre-share values:
Market
$
52
$
21
Book
$
15
$
10
Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share, and that neither firm has any debt before or after the merger.
a.
Assuming the pooling of interests method is used, what is the equity of the combined firm?
Equity value
$
b.
List the assets of the combined firm assuming the purchase accounting method is used.
Assets from X
$
Assets from Y
Goodwill
Total Assets XY
$
Please dont provide solution image based thnx
Consider the following premerger information about Firm X and Firm Y:
Firm X
Firm Y
$79,000
$14,000
36,000 11,000
Total earnings
Shares
outstanding
Per-share values:
Market
Book
$
$
Assets from X
Assets from Y
Goodwill
Total Assets XY
51 $
11 $
16
6
Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a
merger premium of $8 per share, and that neither firm has any debt before or after the
merger. Construct the postmerger balance sheet for Firm X assuming the use of the
purchase accounting method. (Do not round intermediate calculations and round your
answers to the nearest whole number, e.g., 32.)
Consider the following premerger information about Firm X and Firm Y:
Firm X
$ 40,000
20,000
Total earnings
Shares outstanding
Per-share values:
Market
Book
$49
$ 20
Firm Y
$15,000
20,000
Total asset of the combined company
$18
$7
Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a
merger premium of $6 per share. Assuming that neither firm has any debt before or after
the merger, what are the total assets of Firm X after the merger?
Total assets XY
Total equity XY = $880,000
Total assets XY = Total equity XY = $760,000
Total assets XY = Total equity XY = $1,240,000
Total assets XY = Total equity XY = $853,600
Total assets XY = Total equity XY = $924,000
=
Chapter 26 Solutions
Fundamentals of Corporate Finance
Ch. 26.1 - Prob. 26.1ACQCh. 26.1 - Prob. 26.1BCQCh. 26.2 - Prob. 26.2ACQCh. 26.2 - Prob. 26.2BCQCh. 26.3 - Prob. 26.3ACQCh. 26.3 - Prob. 26.3BCQCh. 26.4 - Prob. 26.4ACQCh. 26.4 - Prob. 26.4BCQCh. 26.5 - Prob. 26.5ACQCh. 26.5 - Prob. 26.5BCQ
Ch. 26.6 - Prob. 26.6ACQCh. 26.6 - Prob. 26.6BCQCh. 26.7 - Prob. 26.7ACQCh. 26.7 - Prob. 26.7BCQCh. 26.8 - Prob. 26.8ACQCh. 26.8 - Prob. 26.8BCQCh. 26.9 - Prob. 26.9ACQCh. 26 - Prob. 26.3CTFCh. 26 - What factors should be considered when deciding...Ch. 26 - Prob. 1CRCTCh. 26 - Prob. 2CRCTCh. 26 - Prob. 3CRCTCh. 26 - Prob. 4CRCTCh. 26 - Prob. 5CRCTCh. 26 - Prob. 6CRCTCh. 26 - Prob. 7CRCTCh. 26 - Prob. 8CRCTCh. 26 - Prob. 9CRCTCh. 26 - Prob. 10CRCTCh. 26 - Prob. 1QPCh. 26 - Prob. 2QPCh. 26 - Prob. 3QPCh. 26 - Prob. 4QPCh. 26 - Prob. 5QPCh. 26 - Prob. 6QPCh. 26 - Prob. 7QPCh. 26 - Prob. 8QPCh. 26 - Cash versus Stock as Payment [LO3] In the previous...Ch. 26 - Prob. 10QPCh. 26 - Prob. 11QPCh. 26 - Prob. 12QPCh. 26 - Prob. 13QPCh. 26 - Prob. 14QPCh. 26 - Prob. 1MCh. 26 - Prob. 2MCh. 26 - Prob. 3MCh. 26 - Prob. 4M
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