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Business, 13.12.2021 04:10 kelly3215

A) The Company AB has a market value of GH¢50 million. Company CD has a market value of GH¢200 million. YY has determined that if it combines resources with AB, cost savings
will be worth GH¢25 million today. On this basis CD makes an offer to buy AB. If CD
makes a cash offer of GH¢65 million for all the shares of AB, what is the cost of this
purchase to CD?
(i) What are the gains of this transaction
(ii) Suppose CD has issued 100 of its shares to its shareholders, and is considering issuing 30
shares to the shareholders of AB, what is the cost of the share offer?

(iii) What is the net present value of the transaction under the cash offer to CD?

(iv) What is the net present value under the share offer?

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