Nelson's Interiors has $1.52 million in net working capital. The firm has fixed assets with a book value of $23.23 million

Which of the following are reasons why a firm may want to divest itself of some of its assets? I. to raise cash II. to unload unprofitable operations III. to improve the strategic fit of a firm's various divisions IV. to comply with antitrust regulations    A.  I and II only B.  I, II, and III only C.  I, III, and IV only D.  II, III, and IV only E.  I, II, III, and IV Refer to section 26.9

55.

Which one of the following statements is correct?    A.  A spin-off frequently follows an equity carve-out. B.  A split-up frequently follows a spin-off. C.  An equity carve-out is a specific type of acquisition. D.  A spin-off involves an initial public offering. E.  A divestiture means that the original firm ceases to exist. Refer to section 26.9

56.

Nelson's Interiors has $1.52 million in net working capital. The firm has fixed assets with a book value of $23.23 million and a market value of $26.16 million. The firm has no long-term debt. The Home Centre is buying Nelson's Interiors for $29.5 million in cash. The acquisition will be recorded using the purchase accounting method. What is the amount of goodwill that The Home Centre will record on its balance sheet as a result of this acquisition?    A.  $1.82 million B.  $3.34 million C.  $3.88 million D.  $4.14 million E.  $6.27 million Goodwill = $29.5m - $1.52m - $26.16m = $1.82

57.

Troyer Markets and Deb's Grocery are all-equity firms. Troyer Markets has 2,400 shares outstanding at a market price of $14.80 a share. Deb's Grocery has 3,200 shares outstanding at a price of $28 a share. Deb's Grocery is acquiring Troyer Markets for $37,500 in cash. What is the merger premium per share?    A.  $0 B.  $0.825 C.  $1.108 D.  $1.216 E.  $1.320 Merger premium per share = ($37,500/2,400) - $14.80 = $0.825

58.

The Cycle Stop has 1,600 shares outstanding at a market price per share of $8.48. Kate's Wheels has 1,750 shares outstanding at a market price of $13 a share. Neither firm has any debt. Kate's Wheels is acquiring The Cycle Stop for $15,000 in cash. What is the merger premium per share?    A.  $0.27 B.  $0.46 C.  $0.90 D.  $1.43 E.  $2.52 Merger premium per share = ($15,000/1,600) - $8.48 = $0.90