Owners of Arthouse Inc

question 12

Multiple Choice

owners of Arthouse Inc., a national artist supplies chain, are contemplating purchasing Craftworks Inc, a smaller chain Arthouse's analysts project that the merger will result in incremental free flows and interest tax savings with a combined present value of $72.52 million, and they have determined that the appropriate discount rate for valuing Craftworks is 16% Craftworks has 4 million shares outstanding and no debt Craftworks' current price is $16.25 What is the maximum price per share that Arthouse should offer?

• A) $16.25
• B) $16.97
• C) $17.42
• D) $18.13
• E) $19.00

Learn how to compute and interpret the standard deviation and mean.

Visualize and interpret data distributions using graphical representations like bar graphs and scatterplots.

Grasp the concept of regression towards the mean and its implications in real-life situations.

Comprehend the significance and interpretation of correlation coefficients.

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Definitions:

P-value

The likelihood of test results being as significantly extreme or more so than what was observed, on the pretext that the null hypothesis is correct.

Two-sided Test

A statistical hypothesis test which determines if there is a significant difference in either direction between the groups or variables being studied.

One-sided Test

A hypothesis test in which the alternative hypothesis specifies a direction of the statistical significance, either greater than or less than a certain value.

P-value

The probability of encountering test data at least as extreme as what has been observed, with the assumption that the null hypothesis is valid.