Question
In: Finance
live the answer in two decimal place Tigo Ltd is contemplating the acquisition of Airtel Ltd....
live the answer in two decimal place
Tigo Ltd is contemplating the acquisition of Airtel Ltd. The present values of the two companies as separate entities are GH¢30million and GH¢10million respectively. Tigo estimates that by combining the two companies, it will reduce marketing and administration costs by ¢700,000 per year in perpetuity. Tigo can either pay ¢15million cash for AIrtel or offer Airtel shareholders a 50% holding in Tigo. The opportunity cost of capital is 10%.
Use this question to answer Question a to Question e
a. What is the gain from the merger *
b. What is the cost of the cash offer? *
c. What is the cost of the stock alternative? *
d. What is the NPV of the acquisition under the cash offer? *
e.What is its NPV under the stock offer? *
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS,
FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 1 year agoRelated Solutions
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