Gentek and Honeywell are all-equity firms. Gentek has 41,000 shares outstanding at a market price of...
Gentek and Honeywell are all-equity firms. Gentek has 41,000 shares outstanding at a market price of $21.50 a share while Honeywell has 75,000 shares outstanding at a price of $36.80 a share. Gentek is acquiring Honeywell for $3,050,000 in cash. The incremental value of the acquisition is $543,000. What is the net present value of acquiring Honeywell to Gentek? $234,000 $242,000 $281,000 $269,000 $253,000
Homework Answers
Net Present value = Value of benefits - Value of costs
= 75,000*36.80 + 543,000 - 3,050,000
= $253,000
Hence, the answer is $253,000
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