1. Fly-by-night couriers is analyzing the possible aquistion of flash-in-the-pan restaurants. Neither has any debt. The forecasts by Fly-by-Night show that the purchase would increease total annual after tax cash flows by $600,000 indefinetely. The current market value of Flash-in-the-pan is $10 Million. The current market value of Fly-by-night is $35 Million. The appropriate discount rate for any change in cash flows form the merger is 8 percent.
What is the total synergy gain from this merger?
A) 7,500,000
B) 8,500,000
C) 6,500,000
D) 9,500,000
E) None of the above
2. Fly-by-night couriers is analyzing the possible aquistion of flash-in-the-pan restaurants. Neither has any debt. The forecasts by Fly-by-Night show that the purchase would increease total annual after tax cash flows by $600,000 indefinetely. The current market value of Flash-in-the-pan is $10 Million. The current market value of Fly-by-night is $35 Million. The appropriate discount rate for any change in cash flows form the merger is 8 percent.
What is the most that Fly-by-night would be willing to pay for flash in the pan?
A) 10,000,000
B) 17,500,000
C) 16,500,000
D) 19,500,000
E) None of the above
3. Fly-by-night couriers is analyzing the possible acquisition of flash-in-the-pan restaurants. Neither has any debt. The forecasts by Fly-by-Night show that the purchase would increase total annual after tax cash flows by $600,000 indefinitely. The current market value of Flash-in-the-pan is $10 Million. The current market value of Fly-by-night is $35 Million. The appropriate discount rate for any change in cash flows form the merger is 8 percent.
The Overall evidence on IPOs is that they tend to be _____
A) Overpriced
B) Priced Fairly
C) Underpriced
D) None of the above