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A companyy is planning an acquisition

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A companyy is planning an acquisition. before the acquisition the normal expected outcomes for the firm was were as follows
ECONOMY OUTCOMES PROBABLITY
Recession $20,000,000 30% or .3
Normal 40,000,000 40% or .4
Strong 60,000,000 30% or .3

After the acquisition the expected outcomes for the firm would be
ECONOMY OUTCOMES PROBABILTY
Recession $10,000,000 .3
Normal 40,000,000 .4
Strong 80,000,000 .3

a. compute the expected return or value, standard deviation and the coefficient of variation before the acquisition
(please check ASSIGNMENT 7 for how to do the expected return, standard deviation and coefficient of variation)
b. after the acquisition these values are as follows:
EXPECTED VALUE WILL BE 43,000,000
STANDARD DEVIATION WILL BE 27,200,000
COEFFICIENT OF DEVIATION .633
Do you think this acquisition is desireable?? Why, Why not??
c. Do you think the company's stock price should go up after the acquisition? Why, why not?
I tried to solve it but the teacher didn't offer any notes or guide.

Reference no: EM13686134

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