What is the synergy from the merger

Assignment Help Financial Management
Reference no: EM13947114

Fly-By-Night Couriers is analyzing the possible acquisition of Flash-in-the-Pan Restaurants. Neither firm has debt. The forecasts of Fly-By-Night show that the purchase would increase its annual aftertax cash flow by $637,104 indefinitely. The current market value of Flash-in-the-Pan is $9 million. The current market value of Fly-by-Night is $30 million. The appropriate discount rate for the incremental cash flows is 7.2 percent. Fly-by-Night is trying to decided whether it should offer 35 percent of its stock or $18.5 million in cash to Flash-in-the-Pan. What is the synergy from the merger?

Reference no: EM13947114

Questions Cloud

Retired before receiving the remaining payments : Ogden Mear did an excellent job saving for retirement. He was able to save $1,000,000 in an account that pays 5 percent per year. His plan was to eventually withdraw all his money by paying himself in equal instalments every six months for the next 2..
A company is looking at replacement equipment : A company is looking at replacement equipment. The existing equipment had an original cost of $985 and currently has a book value of $325. If the equipment could be sold for $500, what are the pre-tax gain (loss), the after-tax gain (loss), and the r..
What is the company target debt-equity ratio : Fama's Llamas has a weighted average cost of capital of 8 percent. The company's cost of equity is 16 percent, and its pretax cost of debt is 10 percent. The tax rate is 39 percent. What is the company's target debt-equity ratio?
Activity-based costing system : Maxx Inc. has provided the following data from its activity-based costing system:
What is the synergy from the merger : Fly-By-Night Couriers is analyzing the possible acquisition of Flash-in-the-Pan Restaurants. Neither firm has debt. The forecasts of Fly-By-Night show that the purchase would increase its annual aftertax cash flow by $637,104 indefinitely. Fly-by-Nig..
Appropriate goal of the firm : Which of the following is an appropriate goal of the firm?
What risk-free dollar denominated return can be locked : If the current exchange rate is $1.60/£, the one-year forward exchange rate is $1.70/£, and the interest rate on British government bills is 5.00% per year, what risk-free dollar denominated return can be locked in by investing in the British bills?
Using economic order quantity model in placing the orders : Cheesburger and Taco Company purchases 15,364 boxes of cheese each year. It costs $26 to place and ship each order and $4.08 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders. How many o..
What would be the increase in value of company after loan : The Maxwell Company is financed entirely with equity. The company is considering a loan of $1.83 million. The loan will be repaid in equal instalments over the next two years, and it has an interest rate of 8 percent. The company’s tax rate is 35 per..

Reviews

Write a Review

Financial Management Questions & Answers

  Save for retirement-return of stock account is expected

You are planning to save for retirement over the next 25 years. To do this, you will invest $850 a month in a stock account and $450 a month in a bond account. The return of the stock account is expected to be 10.5 percent, and the bond account will ..

  Relativity greater total market capitalizations

Also, a _______-weighted index is "distorted" in that it is influenced equally by both large and small firms whereas a ______-weighted index is "distorted" in that it is influenced more by firms with relativity greater total market capitalizations.

  Additional paid-in capital refers

Additional paid-in capital refers to:

  About profitability ratios

Decision makers and analysts look deeply into profitability ratios to identify trends in a company’s profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive

  What is the amount of the last dividend paid

Roy's Welding common stock sells for $48.96 a share and pays an annual dividend that increases by 2.5 percent annually. The market rate of return on this stock is 14.6 percent. What is the amount of the last dividend paid?

  Sum of the present values of expected cash flows

Which of the following would lower the sum of the present values of expected cash flows?

  Results from national association of colleges and employers

The survey results from the National Association of Colleges and Employers (NACE) show the average annual increases in salaries for new accounting graduates to be 3.42% since the year 2000. If new starting salaries in accounting were $36,919 in 2000,..

  Thinking of buying a craft emporium

You are thinking of buying a craft emporium, it is expected to generate cash flows of 30,000 per year in years 1 through 5, and $40,000 per year in 6 through 10. if the appropriate discount rate is 8 % , what amount are you willing to pay for the emp..

  Period of depressed earnings performance

Excel Corporation has recently witnessed a period of depressed earnings performance. As a result, cash dividend payments have been suspended. Investors do not anticipate a resumption of dividends until 2 years from today, when a yearly dividend of $0..

  What is the effective cost of borrowing in this case

Your firm has an average collection period of 27 days. Current practice is to factor all receivables immediately at a discount of 1.7 percent. What is the effective cost of borrowing in this case?

  Series of deposits into an interest-bearing account earning

You plan to make a series of deposits into an interest-bearing account earning 11%. You will deposit $2,000 today, $3,000 two years from today, and $9,000 five years from today. If you withdraw $2,000 four years from today and $5,000 seven years from..

  Risk increases as the term of the loan decreases

The annual interest rate divided by the number of days in a year is the periodic rate. Fixed -rate loan portfolios expose lenders to higher interest-rate risk. In general, risk increases as the term of the loan decreases. Loans charged to loss repres..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd