50.1K

Verified Solution

Link Copied!

A. A Belgian firm named Waffles is bidding to take over a firm in London called Tea & Biscuits. Waffles has 4,000 shares outstanding selling at 20 per share. Tea & Biscuits has 3,600 shares outstanding selling at 4 per share. The estimated synergy gains from merger are 18,000. If Tea & Biscuits can be acquired for 6 per share, what is the NPV of the merger to Waffles? B. The company American Crispy Dark Chocolate (AC/DC) is concerned about cocoa prices prior to accumulating an inventory of 1,000 tons of cocoa before the Halloween sales. Analysts project that price per ton could vary from $1,250 to $1,500. AC/DC buys 500 ton forward at a price of $1,340 per ton for a premium of $120 per ton. For the remaining 500 tons, Hershey buys a call option with a $1,265 strike price per ton for a premium of $145 per ton. What is AC/DC's profit/loss from this strategy if the price of cocoa is $1,300 at the time of delivery? C. If the current exchange rate is JPY18:DKK1, the Japanese (JPY) risk free interest rate is 0.5%, the Danish (DKK) risk free interest rate is 4%, what is the 4 year forward exchange rate? D. Suppose you own a risky asset with an expected annual return of 6% and the annual standard deviation of 12%. If returns are normally distributed, what is the approximate probability of receiving a return greater than 30% in a given year

Answer & Explanation Solved by verified expert

See Answer