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