Study Guides (248,419)
Canada (121,525)
Finance (316)
FIN 401 (73)

Crib sheet Fin 401.doc

1 Page
Unlock Document

FIN 401
Melissa Toffanin

Chapter 23 Mergers and Basis Risk When cross-hedging, the Acquisition. risk that the futures prices does not Synergy move directly with the cash price of The whole is worth more than the sum of the parts the hedged asset Number of new shares to be issued ∆V = V AB – (VA+ V )B = funds to be raised/subscription When ∆V>0, the acquisition price generates synergy Number of rights needed to buy one ∆CF = ∆EBIT + ∆Depreciation - ∆Tax - ∆Capital Requirements share = # of old shares/# of new shares ∆CF = ∆Revenue - ∆Costs - ∆Tax - “Cost” to shareholder for one new ∆Capital Requirements share ∆Revenue = difference in revenues = # of exercised rights + subscription ∆Costs = difference in costs price ∆Tax = difference in taxes Ex-rights price ∆Capital Requirements = change in = 1/(N + 1) × (N × initial stock price new fixed assets and net working + subscription price) capital The NPV of a cash acquisition is Theoretical value of a right = (M0– S)/(N + 1) NPV = V *B– cash cost M =0common share price during Value of the com
More Less

Related notes for FIN 401

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.