Reference no: EM132647023

Problem - Through a "Type C" reorganization, Springer Corporation was merged into Spaniel Corporation last year. Springer shareholders received 40% of the Spaniel stock in exchange for all of their Springer shares. Springer liquidated immediately after the exchange. At the time of the merger, Springer was worth $2,000,000. The Springer shareholders are promised that Spaniel will purchase for $3,000,000 all of their stock five years after the reorganization. If the shareholders use a 5% discount rate, demonstrate whether this offer should be accepted. Hint: Use text Appendix F in your analysis.