Barlow Manufacturing Has Announced Plans to Acquire Hull Enterprises

question 8

Multiple Choice

Barlow Manufacturing has announced plans to acquire Hull Enterprises.Barlow is trading for $31.50 per share and has a premerger value of $12 billion,while Hull is trading for $21.75 per share and has a premerger value of $4 billion dollars.If the projected synergies from the merger are $675 million,what is the maximum exchange ratio that Barlow could offer in a stock swap and still generate a positive NPV?

• A)0.807
• B)0.729
• C)1.693
• D)1.530
• E)0.749

---

Definitions:

Credited

To add a sum of money to an account, or to acknowledge someone's contribution to something.

Payment

The transfer of money from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Account

A record or statement of financial expenditure and receipts relating to a particular period or purpose.

Terms

The components of an algebraic expression that are separated by addition or subtraction signs.