Kubwa limited wishes to acquire Ndogo limited. The directors of Kubwa limited wish to justify the...
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Kubwa limited wishes to acquire Ndogo limited. The directors of Kubwa limited wish to justify the acquisition on the grounds that it will increase the shareholders wealth. The supporting evidence produced by the directors of Kubwa limited is as shown below. Kubwa ltd Ndogo ltd (sh.000) (sh.000) 12,000 5,800 (4,431) 7,969 (2,789) 5,180 Earnings attributable to ord. shareholders Earnings per share (pre- acquisition) Sh.14.80 Sh.222 Market price per share (pre- acquisition) Estimated market price per share (post acquisition) Sh.240 Operating Profit Interest payable Profit before tax Tax (2,200) 3,600 (1,260) 2,340 Sh.29.25 Sh.322 Sh.360 Required a) Show calculation of how directors of Kubwa arrive at their estimated post acquisition values and if you do not agree with these estimates produce the revised estimates of the post acquisition value. Kubwa limited wishes to acquire Ndogo limited. The directors of Kubwa limited wish to justify the acquisition on the grounds that it will increase the shareholders wealth. The supporting evidence produced by the directors of Kubwa limited is as shown below. Kubwa ltd Ndogo ltd (sh.000) (sh.000) 12,000 5,800 (4,431) 7,969 (2,789) 5,180 Earnings attributable to ord. shareholders Earnings per share (pre- acquisition) Sh.14.80 Sh.222 Market price per share (pre- acquisition) Estimated market price per share (post acquisition) Sh.240 Operating Profit Interest payable Profit before tax Tax (2,200) 3,600 (1,260) 2,340 Sh.29.25 Sh.322 Sh.360 Required a) Show calculation of how directors of Kubwa arrive at their estimated post acquisition values and if you do not agree with these estimates produce the revised estimates of the post acquisition value.
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Related Book For
Corporate Finance and Investment decisions and strategies
ISBN: 978-1292064062
8th edition
Authors: Richard Pike, Bill Neale, Philip Linsley
Posted Date:
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