Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. shoop ltd is considering the acquisition of requim

Shoop Ltd is considering the acquisition of Requim Inc. The values of Shoop Ltd is...

60.1K

Verified Solution

Question

Accounting

Shoop Ltd is considering the acquisition of Requim Inc. The values of Shoop Ltd is $13.8 million and Requim Inc is $8.8 million. Shop Ltd estimates that by merging the two companies it will decrease expenses by $480000 per annum in perpetuity. Shoop Ltd can either pay $10.9 million cash for Requim Inc or offer Requim Inc a 50 per cent holding in Shoop Ltd. If the cost of capital is 10 per cent per annum: (a) What is the gain, in present value terms, from the merger? (b) What is the net cost of the cash offer?

(c) What is the net cost of the share alternative?

(d) What is the NPV of the acquisition under (Negative amounts should be indicated by a minus sign. Enter your answers in millions. Round your answers to 2 decimal places.): NPV under the cash offer? NPV under the share offer?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Measurements on the percentage of enrichment of 12 fuel rods used in a nuclear reactor were...

Basic Math
Q

8 Researchers are studying a population of robins that has a variety of body masses...

Biology
Q

A small solid ball mass 0 1 kg rolls without slipping along the track shown...

Physics
Q

43 Determine the following a The 95th percentile of the chi squared distribution with 10...

Statistics
Q

32 Evaluate the expression tan sin 1 5 13 cos 3 5 A 33 56...

Calculus
Q

9 V6x V2x A 2 C 12 1 11 5 20 4 4 S 5...

Algebra
Q

please give tons of details 1. How serious were Stephen Richards' actions? Give a...

Accounting
Q

CASE 832 Net Present Value Analysis of a New Product [LO 8-2] Matheson Electronics has...

Accounting
Q

Calculate the cash gap for Johnson \& Johnson given the following information (in \$ millions)....

Accounting
Q

Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed...

Accounting
Q

The most recent financial statements for Nuesca Holidays Inc. follow. Sales for 2018 are projected...

Finance
Q

Oriole Corp. had total variable costs of $221,100, total fixed costs of $99,000, and total...

Accounting