ABC Corp. has reached a deal to acquire DEF Inc. at $450 per share. This represents...

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ABC Corp. has reached a deal to acquire DEF Inc. at $450 per share. This represents 30% premium over the closing price of DEF. While some analysts commented that this valuation of 100 times earnings of DEF was quite high, ABC contended that considering the large growth rate of DEF, the PEG ratio for this deal is a reasonable 2.1. The closing price of DEF was per share. The earnings per share of DEF were The growth rate of DEF was 96. ABC Corp. has reached a deal to acquire DEF Inc. at $450 per share. This represents 30% premium over the closing price of DEF. While some analysts commented that this valuation of 100 times earnings of DEF was quite high, ABC contended that considering the large growth rate of DEF, the PEG ratio for this deal is a reasonable 2.1. The closing price of DEF was per share. The earnings per share of DEF were The growth rate of DEF was 96.

Answer rating: 100% (QA)

SOLUTION a To calculate the closing price of DEF we can use the fact that the acquisition price offe... View the full answer