Questions from Corporate Finance

Q: Dani Corp. has 5.5 million shares of common stock

Dani Corp. has 5.5 million shares of common stock outstanding. The current share price is $83, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issu...

Q: Pearl, Inc., has offered $197 million cash for all

Pearl, Inc., has offered $197 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $178 million as an independent operation. If the merger make...

Q: Consider the following premerger information about Firm A and Firm B:

Consider the following premerger information about Firm A and Firm B: Assume that Firm A acquires Firm B via an exchange of stock at a price of $61 for each share of B’s stock. Bot...

Q: Fly-By-Night Couriers is analyzing the possible acquisition of

Fly-By-Night Couriers is analyzing the possible acquisition of Flash-in-the-Pan Delivery. Neither firm has debt. The forecasts of Fly-By-Night show that the purchase would increase its annual aftertax...

Q: Harrods PLC has a market value of £85 million and 4

Harrods PLC has a market value of £85 million and 4.5 million shares outstanding. Selfridge Department Store has a market value of £30 million and 1.8 million shares outstanding. Harrods is contemplat...

Q: Consider the following premerger information about Firm X and Firm Y:

Consider the following premerger information about Firm X and Firm Y: Assume that Firm X acquires Firm Y by issuing new long-term debt for all the shares outstanding at a merger premium of $5 per sh...

Q: Assume that the following balance sheets are stated at book value

Assume that the following balance sheets are stated at book value. Suppose that Meat Co. purchases Loaf, Inc. The fair market value of Loaf’s fixed assets is $11,500 versus the $8...

Q: Silver Enterprises has acquired All Gold Mining in a merger transaction.

Silver Enterprises has acquired All Gold Mining in a merger transaction. Construct the balance sheet for the new corporation if the merger is treated as a purchase of interests for accounting purposes...

Q: Penn Corp. is analyzing the possible acquisition of Teller Company.

Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no debt. Penn believes the acquisition will increase its total aftertax annual cash flows by $1.45 million indefinit...

Q: Three Guys Burgers, Inc., has offered $15.3

Three Guys Burgers, Inc., has offered $15.3 million for all of the common stock in Two Guys Fries Corp. The current market capitalization of Two Guys as an independent company is $12.1 million. Assume...