X company has voted in favor of being bought out by Y company. Information about each...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
X company has voted in favor of being bought out by Y company. Information about each company is presented below. (5.0) Price-Earnings Ratio Number of Shares Earnings Y Company 16 100,000 TK 225,000 X Company 10.8 50,000 Tk. 100,000 Shareholders of X company will receive six-tenths of a share of Y company for each share they hold. It is expected that synergy results in an increase of TK. 13000 earnings. How will the earnings per share (EPS) for these shareholders be changed? How much of it is the appearance of earning growth? Why does it happen? i) ii) What will be the effect on the market price of Y shareholders of changes in the EPS? iii) What will be the total market value of Y's common stock after the acquisition? How much is the synergistic value resulting from this merger, if any? Redo your answers to (i), (ii), and (iii) if the market is fooled. iv) X company has voted in favor of being bought out by Y company. Information about each company is presented below. (5.0) Price-Earnings Ratio Number of Shares Earnings Y Company 16 100,000 TK 225,000 X Company 10.8 50,000 Tk. 100,000 Shareholders of X company will receive six-tenths of a share of Y company for each share they hold. It is expected that synergy results in an increase of TK. 13000 earnings. How will the earnings per share (EPS) for these shareholders be changed? How much of it is the appearance of earning growth? Why does it happen? i) ii) What will be the effect on the market price of Y shareholders of changes in the EPS? iii) What will be the total market value of Y's common stock after the acquisition? How much is the synergistic value resulting from this merger, if any? Redo your answers to (i), (ii), and (iii) if the market is fooled. iv)
Expert Answer:
Answer rating: 100% (QA)
The detailed answer for the above question is provided below i How will the earnings per share EPS for these shareholders be changed To calculate the EPS for the shareholders of X company after the ac... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these accounting questions
-
(Forward contract payout) Construct a delivery date profit or loss graph for a short position in a forward contract with a delivery price of $55. Analyze the profit or loss for values of the...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Consider the following reaction: 2 NO(g) 2 N(g) + O(g) part A: Express the rate of the reaction in terms of the change in concentration of each of the reactants and products. Part B: In the first...
-
Suppose the following data apply: Total reserves: ......................................$36 billion Transactions deposits:........................... $600 billion Cash held by public:...
-
H&J Ditching & Excavating, Inc., was hired by JRSF, LLC, to perform excavating and grading work on Terra Firma, a residential construction project in West Knox County, Tennessee. Cornerstone...
-
White Corporation has 80,000 shares of \(\$ 5\) par value common stock outstanding. At year-end, the company declares a five percent stock dividend. The market price of the stock on the declaration...
-
How did the new project selection process handle nonnumeric type projects? Risk? How did this new process alter new project proposals at HP?
-
The controller of Arrowroot Company wishes to improve the company's control system by preparing a monthly cash budget. The following information relates to the month ending July 31, 2021: June 30,...
-
John Fuji (birthdate June 6, 1981) received the following Form W-2 from his employer related to his job as a manager at a Washington apple-processing plant: Johns other income includes interest on a...
-
a. Use the Black-Scholes formula to find the value of the following call option. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. 1. Time to expiration 1...
-
The December 31, 20X8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the following summarized amounts: PINT CORPORATION AND SALOON COMPANY Balance...
-
(a) Express z, the distance between the camera and the train, as a function of x. A. z = /0.25 + x2 B. Z= C. N= V0.64+x2 0.8+ x2 A v 4 (b) How fast is the distance from the camera to the train...
-
MyZ Company is an innovative company that recently invented some new technology that allows AI to work with hospital medical files on patients with severe health conditions. AI analyzes all existing...
-
Jennifer needed $8000 to start a web page design company and signed a 200-day note with a face value of $8366.56. Find the discount rate. Use banker's interest of 360 days. The discount rate is %....
-
University Student Supplies needs funds to obtain books before the start of the semester. The store manager signed a promissory note with a face value of $22,860. Find the ordinary interest rate if...
-
Using the same facility you chose in Week 1, construct a policy that details how employee performance appraisals will be conducted in the organization. In your policy, be sure to address the...
-
What is an insurable interest? Why is it important?
-
Teresa is a civil engineer who uses her automobile for business. Teresa drove her automobile a total of 21,732 miles during 2012, of which 95 percent was business mileage. The actual cost of...
-
Mark owns his home and has a $250,000 mortgage related to his purchase of the residence. When his daughter went to college in the fall of 2012, he borrowed $20,000 through a home equity loan on his...
-
Quince Corporation has taxable income of $450,000 for its 2012 calendar tax year. Calculate the corporation's income tax liability for 2012 before tax credits. $_________
-
Describe and explain how the equilibrium wage and level of employment are determined in labor markets.
-
Explain derived demand and how firms decide the profit-maximizing quantity of labor to employ.
-
Switching costs can give an advantage to the _________ firms in an industry.
Study smarter with the SolutionInn App