When you are working with a percent hypothesis, the interpretation of a hypothesis test is directly linked to the sampling distribution concept, but that is not the case with an average hypothesis

Which of the following defenses best describes the role of HiFly in the acquisition scenario?

Modern Auto, an automobile parts supplier, has made an offer to acquire Sky Systems, creator of software for the airline industry. The offer is to pay Sky Systems’ shareholders the current market value of their stock in Modern Auto’s stock. The relevant information it used in those calculations is given below: Modern Auto Sky Systems Share price $40 $25 Number of outstanding shares (millions) 40 15 Earnings (millions) $100 $30 Although the total earnings of the combined company will not increase and are estimated to be $130 million, Charles Wilhelm (treasurer of Modern Auto) argues that there are two attractive reasons to merge. First, Wilhelm says, “The merger of Modern Auto and Sky Systems will result in lower risk for our shareholders because of the diversification effect.” Second, Wilhelm also says, “If our EPS increases, our stock price will increase in line with the EPS increase because our P/E will stay the same.” Sky Systems’ managers are not interested in the offer by Modern Auto. The managers, instead, approach HiFly, Inc., which is in the same industry as Sky Systems, to see if it would Chapter 10 Mergers and Acquisitions 75 part-i-10 13 January 2012; 10:24:23 be interested in acquiring Sky Systems. HiFly is interested, and both companies believe there will be synergies from this acquisition. If HiFly were to acquire Sky Systems, it would do so by paying $400 million in cash. HiFly is somewhat concerned whether antitrust regulators would consider the acquisition of Sky Systems an antitrust violation. The market in which the two companies operate consists of eight competitors. The largest company has a 25 percent market share. HiFly has the second-largest market share of 20 percent. Five companies, including Sky Systems, each have a market share of 10 percent. The smallest company has a 5 percent market share A. Crown jewel. B. Pac-Man. C. White knight

Today, you are retiring. You have a total of $411,016 in your retirement savings and have the funds invested such that you expect to earn an average of 7.10 percent, compounded monthly, on this money throughout your retirement years. You want to withdraw $2,500 at the beginning of every month, starting today. How long will it be until you run out of money?

A. 31.97 years B. 34.56 years C. 42.03 year D. 48.19 years E. You will never run out of money