Eastern has 4 million shares outstanding and no debt


Dunbar Hardware, a national hardware chain, is considering purchasing a smaller chain, Eastern Hardware. Dunbar's analysts project that the merger will result in incremental free flows and interest tax savings with a combined present value of $72.52 million, and they have determined that the appropriate discount rate for valuing Eastern is 16%. Eastern has 4 million shares outstanding and no debt. Eastern's current price is $16.25. What is the maximum price per share that Dunbar should offer? Show your work.

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Eastern has 4 million shares outstanding and no debt
Reference No:- TGS0641545

Expected delivery within 24 Hours