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1. The balance sheets for the Raider Company and the Target Company appear below: Raider balance sheet $2,800 Current assets $3,800 Debt $8.400 PP&E $7.400 Stockholders' equity $11,200 Total assets $11,200 $1,400 $4,600 $6,000 Target balance sheet Current assets $2,800 PP&E $3,200 Total assets $6,000 Debt Stockholders' equity The Raider Company plans to takeover the Target Company. The Raider Company has 890 common shares outstanding, their equity price-to-book ratio is 3.00, and their price-to-earnings ratio is 39.2. The Target Company has 840 common shares outstanding, their equity price-to-book ratio is 0.80, and their price-to-earnings ratio is 11.4. The Raider Company offers 1 share(s) of Raider stock to Target shareholders that tender 6 Target shares the exchange ratio is 0.166667; assume fractional shares can be exchanged). Suppose tax effects and synergistic gains and losses equal zero; that is, accumulated sales, costs, and profits remain the same. After the Raider takes control of all Target shares, what is the percentage change in Target shareholder wealth? a. 31% b. 24% c. 26% d. 21% e. 29% 1. The balance sheets for the Raider Company and the Target Company appear below: Raider balance sheet $2,800 Current assets $3,800 Debt $8.400 PP&E $7.400 Stockholders' equity $11,200 Total assets $11,200 $1,400 $4,600 $6,000 Target balance sheet Current assets $2,800 PP&E $3,200 Total assets $6,000 Debt Stockholders' equity The Raider Company plans to takeover the Target Company. The Raider Company has 890 common shares outstanding, their equity price-to-book ratio is 3.00, and their price-to-earnings ratio is 39.2. The Target Company has 840 common shares outstanding, their equity price-to-book ratio is 0.80, and their price-to-earnings ratio is 11.4. The Raider Company offers 1 share(s) of Raider stock to Target shareholders that tender 6 Target shares the exchange ratio is 0.166667; assume fractional shares can be exchanged). Suppose tax effects and synergistic gains and losses equal zero; that is, accumulated sales, costs, and profits remain the same. After the Raider takes control of all Target shares, what is the percentage change in Target shareholder wealth? a. 31% b. 24% c. 26% d. 21% e. 29%

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