Estimated value of the synergistic benefits from the merger

Assignment Help Financial Management
Reference no: EM131064626

Holmes, Inc., has offered $542 million cash for all of the common stock in Watson Corporation. Based on recent market information, Watson is worth $504 million as an independent operation. If the merger makes economic sense for Holmes, what is the minimum estimated value of the synergistic benefits from the merger?

A. $30 million

B. $38 million

C. $15 million

D. $50 million

Reference no: EM131064626

Questions Cloud

Debt-equity ratio-pretax cost of the firms debt : Mojito Mint company has a debt-equity ratio of .35. The required return on the company's unlevered equity is 12.8 percent, and the pretax cost of the firm's debt is 6.5 percent. Sales revenue for the company is expected to remain stable indefinitely ..
Process of preparing a production cost budget : Mama Italiano Sauce is in the process of preparing a production cost budget for May. The actual costs in April were: Mama Italian Sauce Production Cost Budget April 2008 Production - Jars of sauce 20,000 Ingredient cost (variable) $16,000 Labor cost ..
Holding period yield on this investment : Exactly three years ago, you purchased a $1,000 face value bond for $1,211.16. The coupon rate was 6.5 percent with interest paid semiannually. Today, you sold that bond for $1,089.54. What was your rate of return for the 3-year period, or holding pe..
Estimated value of the synergistic benefits from the merger : Holmes, Inc., has offered $542 million cash for all of the common stock in Watson Corporation. Based on recent market information, Watson is worth $504 million as an independent operation. If the merger makes economic sense for Holmes, what is the mi..
Identifying information on your credit report is collected : If there is bad information on your credit report, what is the best thing you can do? The identifying information on your credit report is collected from whom? When is variety in your use of credit going to become more important?
Using the percentage of sales method : Baldwin Products Company anticipates reaching a sales level of $6 million in one year. The company expects earnings after taxes during the next year to equal $400,000. Using the percentage of sales method, calculate the additional financing Baldwin P..
Establishing a high level of creditworthiness : Always paying cash is helpful in establishing a high level of creditworthiness. Credit reports contain non-discriminatory information. Understanding how credit works and how it relates to you is important for many aspects of your life. Bounced checks..
What is the current value of the lease : Your car dealer is willing to lease you a new car for $309 a month for 48 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 4.1 percent, what is the current value of th..

Reviews

Write a Review

Financial Management Questions & Answers

  Expanding rapidly-currently needs to retain all of earning

Micro Tech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Micro tech to begin paying dividends, beginning with a dividend of $1.50 coming 3 years from to..

  Effective annual interest rate on this lending arrangement

Come and Go Bank offers your firm a discount interest loan at 9 percent for up to $25 million, and in addition requires you to maintain a 5 percent compensating balance against the amount borrowed. What is the effective annual interest rate on this l..

  Identify what strategic leadership skills are needed for

imagine that you are the entrepreneur who has created a successful new venture. the venture is posed to expand

  Identify and describe a business crisis situation

Identify and describe a business crisis situation and the main leaders involved

  Assignment brief financial management assignmentnbsp1

assignment brief financial management assignment.nbsp1. critically evaluate the role and function of finance including

  Considering renovation that will improve physical facilities

Lincoln Park Zoo in Chicago is considering a renovation that will improve some physical facilities at a cost of $1,800,000. Addition of new species will cost another $310,000. Additional maintenance, food, and animal care and replacement will cost $1..

  Transfers qualify for a marital deduction

All the following transfers qualify for a marital deduction EXCEPT:

  Stock is divided between capital gains-dividend yield

Suppose you know that a company’s stock currently sells for $65.30 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. If the ..

  Any distribution is made to common stockholders

On January 2, 2015, Easton Corporation issued 50,000 shares of 5% cumulative preferred stock at $100 par value. No dividends have been paid to any shareholders since the formation of the corporation. Management wants to issue a dividend to common sha..

  Considering renovation that will improve physical facilities

Lincoln Park Zoo in Chicago is considering a renovation that will improve some physical facilities at a cost of $1,800,000. Addition of new species will cost another $310,000. Additional maintenance, food, and animal care and replacement will cost $1..

  Four-year project to improve its production efficiency

Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $533711 is estimated to result in some amount of annual pretax cost savings. The press will have an aftertax salvage valu..

  What is after-tax cost of capital for this debt financing

Great Seneca Inc. sells $100 million worth of 24-year to maturity 13.75% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $974 for each $1,000 bond. The firm's marginal tax rate is 35%. What is the after-tax cost of capital ..

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