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  3. 2. company currently sells for $24/share. manageme

2. Company currently sells for $24/share. Management holds 40% of the 1 million shares outstanding. Chang...

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Finance

2. Company currently sells for $24/share. Managementholds 40% of the 1 million shares outstanding. Chang Inc. isconsidering acquiring Li because of positive synergies. Theestimated present value of these synergies is $8 million. Inaddition, Chang feels that the management of Li is overpaid andhave a lot of unnecessary perks like yachts and jets to fly around.Getting rid of all these will save the firm about $400,000 peryear. This would add $3 million in value to theacquisition.

What is the maximum price per share that Chang shouldpay?

What price would you offer?


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