KT corporation has announced plans to acquire MJ corporation. KT is trading for $45 per share...

KT corporation has announced plans to acquire MJ corporation. KT is trading for $45 per share and MJ is trading for $25 per share, with a pre-merger value for MJ of $3 billion dollars. If the projected synergies from the merger are $750 million, what is the maximum exchange ratio that KT could offer in a share swap and still generate a positive NPV?

Expert Solution

jeff jeffy answered 1 year ago

The NFF Corporation has announced plans to acquire LE Corporation. NFF is trading for $ 32...

The NFF Corporation has announced plans to acquire LE Corporation. NFF is trading for $ 32 per share, and LE is trading for $65 per share, implying a pre-merger value of LE of approximately $ 8.6 billion. If the projected synergies are $1.04 billion, what is the maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV? ABC has 11 million shares outstanding, each of which has a price of $23. It has made...

A Corporation announced of its plans to pay: $3 dividend per share in 1 year, $6...

A Corporation announced of its plans to pay: $3 dividend per share in 1 year, $6 dividend per share in 2 years, $9 dividend per share in 3 years, after which the dividend will be increasing at a constant annual growth rate of 5 percent. The rate of return for this company is 12%. Calculate the value of one share of its stock. Part of the calculation will be finding the Present Value of a ordinary annuity annuity due regular...

The stock of DT Corp was trading at $21 per share when BW Inc. announced a...

The stock of DT Corp was trading at $21 per share when BW Inc. announced a deal to buy DT Corp for $28 per share. On the news, shares of DT moved up to $27 per share. However, deal might fall through due to regulatory concerns. If the EMV of buying the stock at $27 is zero, what is the probability that the deal will go through at $28 per share? [Assume that if the deal is blocked, the stock...

ABC Corporation has 12 million shares outstanding, now trading at 65£ per share. The firm has...

ABC Corporation has 12 million shares outstanding, now trading at 65£ per share. The firm has estimated the expected rate of return to shareholders at about 15%. It has also issued 5-year bonds of 400 million at an interest rate of 8%. It pays tax at a marginal rate of 35%. What is ABC’s after-tax WACC? Compute the present value of interest tax shields generated by the 5-year bonds A customer has ordered goods from ABC generating a present value...

Omega Corporation has 10.9 million shares outstanding, now trading at $64 per share. The firm has...

Omega Corporation has 10.9 million shares outstanding, now trading at $64 per share. The firm has estimated the expected rate of return to shareholders at about 15%. It has also issued long-term bonds at an interest rate of 6%. It pays tax at a marginal rate of 34%. Assume a $245 million debt issuance. a. What is Omega’s after-tax WACC? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Omega’s after-tax WACC % b. How much higher...

Omega Corporation has 11.7 million shares outstanding, now trading at $48 per share. The firm has...

Omega Corporation has 11.7 million shares outstanding, now trading at $48 per share. The firm has estimated the expected rate of return to shareholders at about 10%. It has also issued $165 million of long-term bonds at an interest rate of 9%. It pays tax at a marginal rate of 34%. a. What is Omega’s after-tax WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) After-tax WACC = _______% b. What would...

Financial Corporation plans to acquire Great Western Inc and wants to know the fair value per...

Financial Corporation plans to acquire Great Western Inc and wants to know the fair value per share of the target firm. In the current year, the free cash flow to firm (FCFF) of Great Western Inc’ is $10 million. It is projected to grow at 20% per year for the next five years. After the first five years, it is expected to grow at a more modest 5% per year. The Financial Corporation estimates that the target firm’s cost of...

Suppose the stock of Jagdambay Exports Corporation is currently trading at $20 per share. a) ...

Suppose the stock of Jagdambay Exports Corporation is currently trading at $20 per share. a) If company issued a 20% stock dividend, what will its new price be? b) If company does a 3:2 stock split, what will its new share price be? c) If company does a 1:3 reverse split, what will its new share price be?

In January 2020, A Co. announced plans to acquire T Co. After a careful valuation process,...

In January 2020, A Co. announced plans to acquire T Co. After a careful valuation process, the directors of A Co. have projected that the present value of the takeover synergies will be US$1.52 million. In addition, the following information is available. A Co. and T Co. price per share are US$25 and US$30, respectively. T Co. has 1.5 million shares outstanding. Use this information to answer the following questions related to a A Co.'s financially feasible offer. Use 2...

Kahuku Corporation has 100 million shares outstanding trading at $20 per share. The company announces its...

Kahuku Corporation has 100 million shares outstanding trading at $20 per share. The company announces its intention to raise $150 million by selling new shares. a. What do market signaling studies suggest will happen to Kahuku’s stock price on the announcement date? Why? b. How large a gain or loss in aggregate dollar terms do market signaling studies suggest existing Kahuku shareholders will experience on the announcement date? c. What percentage of the value of Kahuku’s existing equity prior to...

Question