b) Book Ltd has a total market value of 125 lakhs (5 lakh shares of Rs.25...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
b) Book Ltd has a total market value of 125 lakhs (5 lakh shares of Rs.25 market value per share). Pencil Ltd has a total market value of 30 lakhs (2 lakh shares of Rs.15 market value per share). Book Ltd is considering the acquisition of Pencil Ltd. The value of Book Ltd after merger (that is, the combined value of the merged firms) is expected to be 200 lakhs due to the operating efficiencies. Book Ltd is required to pay 50 lakhs to acquire Pencil Ltd. What is the economic advantage and net economic advantage to Book Ltd if it acquires Pencil Ltd? What will be the new share price if, instead of giving cash, Book Ltd issues shares in the ratio of cash-to-be-paid to combined value of the merged firms? Note: Please dont provide answers is ms Excel b) Book Ltd has a total market value of 125 lakhs (5 lakh shares of Rs.25 market value per share). Pencil Ltd has a total market value of 30 lakhs (2 lakh shares of Rs.15 market value per share). Book Ltd is considering the acquisition of Pencil Ltd. The value of Book Ltd after merger (that is, the combined value of the merged firms) is expected to be 200 lakhs due to the operating efficiencies. Book Ltd is required to pay 50 lakhs to acquire Pencil Ltd. What is the economic advantage and net economic advantage to Book Ltd if it acquires Pencil Ltd? What will be the new share price if, instead of giving cash, Book Ltd issues shares in the ratio of cash-to-be-paid to combined value of the merged firms? Note: Please dont provide answers is ms Excel
Expert Answer:
Answer rating: 100% (QA)
To determine the value of Pencil Ltd after the merger with Book Ltd we need to consider the relative ... View the full answer
Related Book For
Financial management theory and practice
ISBN: 978-0324422696
12th Edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
Posted Date:
Students also viewed these finance questions
-
26. With its current leverage, Impi Corporation will have net income next year of 4.5 million. If Impis corporate tax rate is 35% and pay 8% interest on its debt, how much additional debt can Impi...
-
The Risk-Return Tradeoff: Molly O'Rourke's Stock Purchase Decision LG3 LG6 Over the past 10 years, Molly O'Rourke has slowly built a diversified portfolio of common stock. Currently her portfolio...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Carrie Carson: Carrie is a 60-year-old tai chi instructor living in Santa Fe, New Mexico. For many years, she practiced in Hollywood, and because of an acting background, she developed a clientele...
-
The motion of a rotor is defined by the relation = 8t3 6(t 2)2, where and t are expressed in radians and seconds, respectively. Determine (a) When the angular acceleration is zero, (b) The...
-
Two types of oxygen regulators for flight crew use on jet transport aircraft are __________________ and __________________.
-
What the procedures are for a third-party stakeholder to deposit funds with the court?
-
Golden State Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the cost of client projects. Traceable costs are charged directly to...
-
4. Record the journal entry that results from the source document shown below on the fourth worksheet tab (labelled "Question IV"). 3783 Desig. No. Account 0265 082475-32 YOUR ACCOUNT HAS BEEN...
-
Forward exchange contract designated as a fair value hedge of a foreign-currency-denominated firm commitment to sell inventory, weakening $US Our U.S.-based company enters into a "firm commitment"...
-
The federal minimum wage and 40-hour workweek were firstintroduced in 1938 by Congress under the Fair Labor Standards Act(FLSA). FDR, president at the time, claimed the law was the mostfar-sighted...
-
A solenoid can be treated as a series \(R L\) circuit. If such a cylindrical solenoid driven by a \(60-\mathrm{Hz}, 120-\mathrm{V} \mathrm{AC}\) source has 1200 turns of \(2 \mathrm{~cm}\) radius...
-
An \(R L C\) series circuit consists of a \(450-\Omega\) resistor, a \(3.00-\mathrm{mF}\) capacitor, and a \(1.00-\mathrm{H}\) inductor. The circuit is driven by a power source that oscillates at...
-
A light ray travels through medium 1 , index of refraction \(n_{1}=1.1\), into medium 2, index of refraction \(n_{2}=1.5\) (Figure P33.55). At what angle with respect to the normal to the interface...
-
A schematic diagram of a refractive microscope is shown in Figure P33.74. The focal length of the objective lens is \(25 \mathrm{~mm}\), that of the eyepiece lens is \(63 \mathrm{~mm}\), and the two...
-
If you are designing a Van de Graaff generator, would you prefer to replace the spherical metallic dome with a dome of some other shape to achieve better charge storage? Justify your answer.
-
The position (x) of a particle moving along x-axis varies with time (t) as shown in figure. The average acceleration of particle in time interval t = 0 tot = 8 s is.
-
If |62x|>9, which of the following is a possible value of x? A. 2 B. 1 C. 0 D. 4 E. 7
-
What is fund capital? How is the cost of fund capital estimated? MINI CASE Sandra McCloud a finance major in her last term of college is currently scheduling her placement interviews through the...
-
What is the estimated cost of equity using the discounted cash flow (DCF) approach? MINI CASE During the last few years, Harry Davis Industries has been too constrained by the high cost of capital to...
-
Draw a graph which shows roughly the shape of the probability distributions for Alta Inds, Am Foam, and T-bills.
-
Derive the frequency equation for the longitudinal vibration of the systems shown in Fig. 8.28. M p. A, E.1 p.A. E,I M k p. A. E,I ell M k (a) (b) FIGURE 8.28 Bar with different end conditions. (c)
-
Fill in the Blank. The ____________ energy of a beam is denoted by \(\frac{1}{2} \int_{0}^{l} E I\left(\frac{\partial^{2} w}{\partial x^{2}} ight)^{2} d x\).
-
A thin bar of length \(l\) and mass \(m\) is clamped at one end and free at the other. What mass \(M\) must be attached to the free end in order to decrease the fundamental frequency of longitudinal...
Study smarter with the SolutionInn App