Question Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1 million shares outstanding. Big Fish expects a discounted synergistic value of $1 million from the merging of operations of the two firms. If Big Fish issues $2.2 million worth of shares to Little Fish's shareholders, what is the NPV of the acquisition? Round your answer to the nearest dollar.

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Transcribed Image Text: Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1 million shares outstanding. Big Fish expects a discounted synergistic value of $1 million from the merging of operations of the two firms. If Big Fish issues $2.2 million worth of shares to Little Fish's shareholders, what is the NPV of the acquisition? Round your answer to the nearest dollar.
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Transcribed Image Text: Big Fish Inc. is acquiring Little Fish Ltd. Big Fish's share price is $10 and Little Fish's share price is $2. Both firms have 1 million shares outstanding. Big Fish expects a discounted synergistic value of $1 million from the merging of operations of the two firms. If Big Fish issues $2.2 million worth of shares to Little Fish's shareholders, what is the NPV of the acquisition? Round your answer to the nearest dollar.
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9MLTYC

{:[" Net Acquisition cost "=$2.2" million "-[$2xx1","000","000]],[=$2","200","000-$2","000","000],[" Net Acquisition cost "=$200","000]:}After acquisition, value of Bigfisly,{:[=[$10 xx1","000","000]+[$2","200","000]],[=$12","200","000]:}Holding percentage of Existing share holder in Bigfish(W_(B))=(10 xx1,000,000)/($12,200,000)=(10,000,000)/(12,200,000 ... See the full answer