The balance sheet for the Raider Company shows Total assets of $12,900 financed by $3,000 of Debt and $9,900 of Stockholders' equity. For the Target Company Total assets of $4,900 are financed by $1,800 ofDebt and $3,100 of Stockholders' equity. The Raider Company plans to takeover the Target Company. The Raider Company has 800 common shares outstanding, their equity price-to-book ratio is 4.70, and their price-to-earnings ratio is 32.3. The Target Company has 620 common shares outstanding, their equity price-to-book ratio is 1.40, and their price-to-earnings ratio is 13.8. The Raider Company offers 2 share(s) of Raider stock to Target shareholders that tender 11 Target shares (the exchange ratio is 0.181818; assume fractional shares can be exchanged). Suppose tax effects and synergistic gains and losses equal zero; that is, accumulated sales, costs, and profits remain the same. After the Raider takes control of all Target shares, what is the total transfer of wealth from Raider to Target shareholders?

To determine the total transfer of wealth from Raider to Target shareholders, we need to calculate the value of the Raider Company and the value of the Target Company before the takeover, and then compare it to the value of the combined companies after the takeover.

1. Calculate the value of the Raider Company:
- Equity value of Raider Company = Number of common shares outstanding * Price-to-book ratio
- Equity value of Raider Company = 800 * 4.70 = $3,760
- Debt value of Raider Company = $3,000 (given)
- Total value of Raider Company = Equity value + Debt value
- Total value of Raider Company = $3,760 + $3,000 = $6,760

2. Calculate the value of the Target Company:
- Equity value of Target Company = Number of common shares outstanding * Price-to-book ratio
- Equity value of Target Company = 620 * 1.40 = $868
- Debt value of Target Company = $1,800 (given)
- Total value of Target Company = Equity value + Debt value
- Total value of Target Company = $868 + $1,800 = $2,668

3. Calculate the exchange ratio:
- The Raider Company offers 2 shares of Raider stock for 11 shares of Target stock.
- Exchange ratio = Number of Raider shares / Number of Target shares
- Exchange ratio = 2 / 11 = 0.181818

4. Determine the value of the combined companies after the takeover:
- Value of combined companies = Value of Raider Company + Value of Target Company
- Value of combined companies = $6,760 + $2,668 = $9,428

5. Calculate the transfer of wealth from Raider to Target shareholders:
- Transfer of wealth = Value of combined companies - Total value of Target Company
- Transfer of wealth = $9,428 - $2,668 = $6,760

Therefore, the total transfer of wealth from the Raider Company to Target shareholders after the takeover is $6,760.

To calculate the total transfer of wealth from Raider to Target shareholders, we need to determine the value of the offer made by Raider Company to the Target shareholders and compare it to the value of the shares owned by the Target shareholders.

1. Calculate the value of Raider Company:
- Equity value of Raider Company = Equity price-to-book ratio * Stockholders' equity
= 4.70 * $9,900
= $46,530

2. Calculate the value of Target Company:
- Equity value of Target Company = Equity price-to-book ratio * Stockholders' equity
= 1.40 * $3,100
= $4,340

3. Determine the number of Raider shares offered per Target share:
- Exchange ratio = Shares offered by Raider / Shares tendered by Target shareholders
= 2 / 11
= 0.181818

4. Calculate the value of the Raider shares offered to Target shareholders:
- Value of Raider shares per Target share = Exchange ratio * Equity value of Raider Company
= 0.181818 * $46,530
= $8,462.36 (rounded to two decimal places)

5. Calculate the value of the shares owned by Target shareholders:
- Total value of Target shares = Number of Target shares * Equity price-to-book ratio * Stockholders' equity
= 620 * 1.40 * $3,100
= $2,713,200

6. Calculate the total transfer of wealth from Raider to Target shareholders:
- Total transfer of wealth = Value of Raider shares offered - Total value of Target shares
= $8,462.36 - $2,713,200
= -$2,704,737.64 (rounded to two decimal places)

Therefore, the total transfer of wealth from Raider to Target shareholders is approximately -$2,704,737.64. This indicates that the Raider Company would be transferring wealth to the Target shareholders.