Greentree Holdings Has Announced Plans to Acquire Mackinac Corporation

question 25

Multiple Choice

Greentree Holdings has announced plans to acquire Mackinac Corporation.Greentree is trading for $15.75 per share and has a premerger value of $950 million,while Mackinac is trading for $24 per share and has a premerger value of $225 million dollars.If the projected synergies from the merger are $95 million,what is the maximum exchange ratio that Greentree could offer in a stock swap and still generate a positive NPV?

• A)0.933
• B)1.676
• C)2.167
• D)0.722
• E)1.885

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Definitions:

Muffins

A small, baked item that is typically sweet, made from batter or dough.

Cookies

Small pieces of data stored on a user's computer by a web browser, mainly used to track and remember information about the user's activities and preferences.

Exchange

The act of trading goods, services, or currencies between parties, either directly or through a medium of exchange like money.

Opportunity Cost

The cost of forgoing the next best choice when making a decision.