1. The CEO of XYZ Company owns 3% of the company and is considering an acquisition. If the acquisition destroys $50 million of the company’s value, but the present value of the CEO’s compensation increases by $5 million, will he be better or worse off?
2. Explain the difference between positive and negative cash flow.
3. Explain working capital in terms of mergers and acquisition metrics. What is its impact?
1. Total Value owned by CEO = 3%After acquisition loss in value of company = $50 millionLoss of CEO percentage company = $50 million × 3%= $1.5 millionLoss of CEO due to acquisition in company…
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