Homework SoursePlease show work Dansville and Tiki are allequity firms Dans
Please show work
Dansville and Tiki are all-equity firms. Dansville has 120,000 shares outstanding at a market price of $35 a share. Tiki has 57,000 shares outstanding at a price of $26 a share. Tiki is acquiring Dansville for $4,750,000 in cash. The synergy value of the acquisition is $875,000. What is the net present value of acquiring Dansville to Tiki?
$875,000
$450,000
$306,000
$325,000
$520,000
| $875,000 | ||
| $450,000 | ||
| $306,000 | ||
| $325,000 | ||
| $520,000 |
Solution
the net present value of acquiring Dansville to Tiki = 120,000*35 + 875,000 - 4,750,000
the net present value of acquiring Dansville to Tiki = 325,000
