prior to a potential merger veggie co has $6,150 in total earnings with $1,800 shares outstanding at a market price per share of $41. Fruits ince has $3300 in total earnings with 1235 shares outstanding at $26 per share. assume veggie co acquires fruits inc via an exchange of stock at a price of $28 for each share of fruits inc stock. both veggie co and fruits inc have no debt outstanding. what will veggie co earning per share be after the merger? A. 3.58 B. 3.32 C. 2.67 D. 3.04 E. 3.95
Q: Question A Suppose your goal for retirement is $2,000,000. Assuming a 6% rate with $20,000 to…
A: The problem case applies the concept of the future value of an annuity. As per the problem…
Q: Let R, be the return on security i, given the following three-factor model: R₁ = a₁ + B₁,111 +…
A: In finance and investment, asset pricing models play a crucial role in understanding and predicting…
Q: Data for Singapore Industries Ltd. EBITDA (NTM) Debt (Interest bearing) Preferred Equity Cash &…
A: The EV/ EBITDA multiple is the most popular metric for trading comparable valuations, which is a…
Q: If a company has an interest rate of 14.31%. Compute the NPV for the following Cash Flows:…
A: Interest rate = r = 14.31%Cash Flow in year 0 = cf0 = -299Cash Flow in year 1 = cf1 = 85Cash Flow in…
Q: A U.S. Company knows that it will have to pay 3 million Euros in three months. The current exchange…
A: Companies involved in international transactions often face the risk of fluctuating exchange rates.…
Q: In December 2010, LoloLimon issued $100 million in bonds. These bonds originally had a 25 year…
A: Bonds refer to the instruments used by companies to raise debt capital from non-traditional sources.…
Q: A stock is expected to have an alpha of 1.70%, an expected return of 8.02%, and a standard deviation…
A: The standard deviation of the non-systematic component of the stock's return under the single index…
Q: In the asset price model, verify that E[S(t)] = Soeht E[S(t)²] = S²e(²µ+o²) t Var[S(t)] = S²e²ut…
A: An asset price model is a theoretical framework used in finance to analyze and understand the…
Q: Camford plc is expected to pay a dividend of £2 per share at the end of year 1, and the dividends…
A: In the given case, we have provided the expected dividend per share for the Year 1 and thereafter…
Q: You are looking at a 1 year instrument that pays a 4%p.a. yield, there is also an instrument that is…
A: The difference in yield between two financial instruments can be determined by comparing their…
Q: LUVFINANCE, Inc. is estimating its WACC. It is operating at its optimal capital structure. Its…
A: Weighted Average cost of capital (WACC) is the cost of total capital of company, where all…
Q: Which of the following will increase the future value of a lump sum investment? O Decreasing the…
A: The future value of a lump sum investment refers to the total value that the investment will grow to…
Q: Cash flows estimation and capital budgeting: You are the head of finance department in XYZ Company.…
A: Net Present value ( NPV ) is computed by deducting initial investment from present value of cash…
Q: A $100 par value bond with 7% annual coupons and maturing at par in 3 years sells at a price to…
A: Current Bond Price is that amount which can be paid by the investor on the basis of future benefits…
Q: unite has a new pair of sunglasses it is evaluating. The company expects to sell 7,200 pairs of…
A: Operating cash flows are the cash flow available from the core business activities of the company…
Q: Company A desires a fixed-rate loan but currently has a better deal from the variable-rate market at…
A: A fixed-rate loan is the amount lent by the lender to the borrower at an interest rate that remains…
Q: ompany A’s stock price is $50 today. It pays dividend of $1 after two months and $1.05 after five…
A: With present value (PV), continuous annual interest rate (r) and period (t), the future value is…
Q: Calculate the accumulated amount at the end of year 16 of the following regular series of payments…
A: The future value is the projected amount of money that an investment or asset will be worth at a…
Q: Rock Haven has a proposed project that will generate sales of 1770 units annually at a selling price…
A: Number of units sold= 1,770Selling price= $26Variable cost per unit= $7.55Fixed cost= $14900Fixed…
Q: ed at time t=0. Calculate the value of the fund after 15 years if the nominal rate of interest is…
A: Future value of money includes the amount of deposit done and the amount of compounded interest…
Q: RocketOwl, Inc. is considering a new product to bring to market. They estimate the product would…
A: Both accounts receivables and accounts payables are part of the working capital of a firm. An…
Q: he difference between a Roth IRA and a traditional IRA is that in a Roth IRA taxes are paid on the…
A: Future valueWith equal periodic deposit or annuity (PMT), periodic interest rate (r) and period (n),…
Q: sunburn sunscreen has a zero coupon bond issue outstanding with a $21,000 face value that matures in…
A: Spot Price (S0)$22,800Exercise price (K)$21,000Risk-free rate ®5%Standard Deviation26%Time duration…
Q: Lingenburger Cheese Corporation has 8.3 million shares of common stock outstanding, 305,000 shares…
A: WACC represents the average cost of capital of the corporation and is estimated by taking the sum of…
Q: The outstanding debt of Berstin Corp. has eight years to maturity, a current yield of 9%, and a…
A: Current yield of bond = 2. Pre - tax cost of debt = where RV = redemption valueNP = current pricen…
Q: Price a convertible bond with par=$1000, conversion ratio=20, annual coupon rate=8.8%, and 2 years…
A: A convertible bond is a bond that can be converted into a certain number of equity shares at the…
Q: Assume the Black-Scholes market model dSt = o St dBt. So > 0, D₁ = e-rt. Let Ot be a derivative with…
A: The Black-Scholes model is a widely used mathematical formula in finance for valuing European-style…
Q: Below is a cash flow projection on a sequential-pay CMO, which has four tranches, A through D.…
A: Sequential payment CMOs are treated as collateralized mortgage obligations, including the…
Q: On September 30, 2016, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of…
A: A coupon bond is a type of debt security issued by governments, municipalities, or corporations. It…
Q: Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the…
A: Analysis of additional information about flight 482: Members of the flight crew are paid fixed…
Q: 1. A project, runs for 5 years, it has an upfront cost of $600,000, and generates total mental cash…
A: A project, runs for 5 years, it has an upfront cost of $600,000 and generates total incremental cash…
Q: Generic Hospital has decided to invest in an Intuitive Robot called the Da Vinci. It is a robotic…
A: With periodic or annual interest rate (r), period (n) and periodic or yearly payment (PMT), the…
Q: Happy Times, Incorporated, wants to expand its party stores into the Southeast. In or to establish…
A: WACC is the cost of capital of the company and is the weighted cost of equity and weighted cost of…
Q: Chester company is presently in all Equity Firm is considering a 5-year project that will generate…
A: MPV is the value added by the project and can be found as the difference between the present value…
Q: A 7-year, 11.00% semiannual coupon bond with a par value of $1000 may be called in 5 years at a call…
A: >Please refer to the below spreadsheet for calculation and answer. Cell reference was also…
Q: Give typing answer with explanation and conclusion The XYZ Corporation stock currently sells…
A: In finance, options are financial derivatives that give buyers the right, but not the obligation, to…
Q: A project has the following cash flows: Cash Flows -$ 12,900 Year e 1 2 3 4 5,760 -1,400 Assuming…
A: The MIRR is a rate that takes into consideration reinvesting positive cash flows at the company's…
Q: NTERNATIONAL FINANCE Today you learned about following exchange rate quotes: (a) 1 KWD (Kuwaiti…
A: In the international business, there is a need for some other currencies but they can not be bought…
Q: Monthly payments are required on a $35,000 loan at 6.0% compounded monthly. The loan has an…
A: A loan is a financial transaction where one party, typically a lender or financial institution,…
Q: Lluvia and Paraguas. Lluvia Manufacturing and Paraguas Products both seek funding at the lowest…
A: In case of interest rate swap, two parties exchange their interest rates for the same notional…
Q: Pear Orchards is evaluating a new project that will require equi The equipment will be depreciated…
A: Depreciation represents the amount charged on an asset over its life due to obsolescence and wear…
Q: A debt of $30,000 is repaid over 14 years with payments occurring monthly. Interest is 12%…
A: Amount of debt = $30,000Period of debt = 14 yearsInterest rate = 12% compounded quarterlyFrequency…
Q: Calculating free cash flows) You are considering new elliptical trainers and you feel you can sell…
A: Initial Outlay:The initial outlay includes the cost of production equipment and the net working…
Q: Suppose Neha is choosing how to allocate her portfolio between two asset classes: risk-free…
A: Portfolio returns are calculated as the simple weighted average of all the stocks/assets in the…
Q: Given the following information, what is the coupon rate of the bond? Years to maturity: 12 Par…
A: Compound = n = Semiannually = 2Time = t = 12 * 2 = 24Face Value = fv = $1000Interest rate = r = 10 /…
Q: The FCFE (free cash flow to the equity) is projected to be $0.3 billion forever, the cost of equity…
A: Free Cash flow to Equity= 0.3 billionCost of equity= 15%WACC=10%Market value of debt= $1.0…
Q: Consider the data on European put option, as described below. stock price today: 5.03 exercise…
A: An equation used in finance to value options and other derivative securities is called the binomial…
Q: An annuity providing a rate of return of 6.4% compounded monthly was purchased for $61,000. The…
A: An Annuity is a payment made regularly for a fixed period of time at a fixed interest rate. This is…
Q: You are performing a valuation of Los Angeles Studios. You have already calculated the enterprise…
A: In the parent's financial statements, the revenues, expenses, profits, and cash flows of the…
Q: (Solving for n) How many years will it take for $510 to grow to $1,084.44 if it's invested at 10…
A: Present Value = pv = $510Future Value = fv = $1084.44Interest Rate = r = 10%Time = n = ?
Step by step
Solved in 3 steps with 2 images
- Consider the following premerger information about Firm X and Firm Y: Firm X $ 40,000 20,000 Total earnings Shares outstanding Per-share values: Market Book $49 $ 20 Firm Y $15,000 20,000 Total asset of the combined company $18 $7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger? Total assets XY Total equity XY = $880,000 Total assets XY = Total equity XY = $760,000 Total assets XY = Total equity XY = $1,240,000 Total assets XY = Total equity XY = $853,600 Total assets XY = Total equity XY = $924,000 =Prior to a potential merger Veggie Co has 4400 shares outstanding at a market price per share of $34.50. Fruits Inc 2300 shares outstanding at $30.50 per share. Assume Veggie Co has estimated the value of the synergistic benefits from acquiring Fruit to be $5600. Neither firm has outstanding debt. The acquiring firm has offered a price of $32.75 per share to the target. If the deal goes through, what is the NPV of the acquisition? A) 425 B) 225 C) 1050 D) 900 E) 575Prior to the merger, Glassons has $1,250 in total earnings with 750 shares outstanding at a market price per share of $42. Country Road has $740 in total earnings with 220 shares outstanding at $18 per share. Assume Glassons acquires Country Road via an exchange of stock at a price of $20 for each share of Country Road's stock. Both Glassons and Country Road have no debt outstanding. What will the earnings per share of Glassons be after the merger?
- Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 40,000 $ 15,000 Shares outstanding 20,000 20,000 Per-share values: Market $ 49 $ 18 Book $ 20 $ 7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $4 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger?Presto Industries is considering the acquisition of the Kasa Company in a stock-for-stock exchange. The following financial data are available on both companies. (Assume no synergy is expected with this merger.) Presto Kasa Sales (in millions) 1,500 350 Net income (in millions) 300 80 Common shares outstanding (in millions) 50 20 Earnings per share 6.00 4.00 Dividends per share 2.50 0.50 Common stock market price 90 160.00 Price/earnings ratio 15.00 40.00 1. Calculate the exchange ratio if Presto offers the Kasa stockholders a 12.50% premium over Kasa’s current market price. 2. Calculate the post-merger earnings per share if the exchange ratio is 1.50 shares of Presto for each share of Kasa. (Assume total post-merger earnings are $380 million.) 3. What is Presto’s post-merger share price if the post-merger price/earnings ratio is 26, and the exchange ratio is 1.70? Assume total post-merger earnings are $380…Apex Corporation is considering the purchase of Pinnacle Company in a stock-for-stock exchange. Selected data on the two companies are shown in the following table: Apex Pinnacle $845 $120 40 36 Sales (millions) Earnings after taxes (millions) Common shares outstanding (millions) Share price Earnings per share Dividends per share. P/E ratio Dividend payout ratio Assume that there are no synergistic benefits as the result of the merger. Determine EPS for the combined company if Apex offers a (Round your answers to three decimal places): a. 10 percent premium for Pinnacle $ b. 20 percent premium for Pinnacle $ c. 30 percent premium for Pinnacle $2,190 $ 280 70 72 $ $ $ 4.00 2.00 18 50% $ $ 3.00 1.20 12 40%
- A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows: Minnie Corporation Mickey Corporation Total earnings $1,682,000 $2,581,000 Number of shares of stock outstanding 290,000 890,000 EPS $5.80 $2.90 P/E ratio 10X 20X Market price per share $58 $58 a. On a share-for-share exchange basis, what will the postmerger EPS be? (Round the final answer to 2 decimal places.) Postmerger earnings per share $ b. If Mickey Corporation pays a 25 percent premium over the market value of Minnie Corporation, how many shares will be issued? (Do not round intermediate calculations.) Shares issued shares c. With the 25 percent premium, what will the postmerger EPS be? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Postmerger earnings per share $Croatia Inc. is in the process of acquiring Vistara Inc. on a share exchange basis. The information related to the two companies is provided below. Profit after tax Shares outstanding Earnings per Share PE Ratio EPS and Croatia Inc. $14,000,000 1,500,000 $8 15 As an analyst of Croatia Inc., you are required to calculate the following: Pre-Merger Market Value per Share of both companies. The maximum share exchange ratio Croatia Inc. can offer without the dilution of: Market Value per Share Vistara Inc. $6,000,000 1,600,000 $5 10 Note: Do not round off any intermediate calculations. Only the rations shall be rounded off up to four decimals. (1) Pre-Merger MV: Croatia Inc- $50. Vistara Inc. = $120.(1) (1) 0.6250 (2) 0.4167 (1) Pre-Merger MV: Croatia Inc. $120. Vistara Inc = $50. () (1) 0.6200 (2) 0.4221 (1) Pre-Merger MV: Croatia Inc.= $120, Vistara Inc. $50 (1) (1) 06250 (2) 04167 (1) Pre-Merger MV: Croatia Inc.= $110, Vistara Inc. = $120.) (1) 0.6200 (2) 0.4221G Company is considering the takeover of K Company whereby it will issue 8,000 common shares for all of the outstanding shares of K Company. K Company will become a wholly owned subsidiary of G Company. Prior to the acquisition, G Company had 15,000 shares outstanding, which were trading at $9.70 per share. The following information has been assembled: Current assets Plant assets (net) Current liabilities Long-term debt Common shares Retained earnings Current assets Plant assets (net) Goodwill Investment in K Company Acquisition differential Current liabilities Long-term debt Common shares Retained earnings Carrying Amount $67,500 79,000 $146,500 $ 21,900 24,500 67,000 33,100 $146,500 G Company $ $ Fair Value $57,000 89,000 $ (b) Prepare G Company's consolidated balance sheet immediately after the combination using the worksheet approach and the acquisition method. (Leave no cells blank - be certain to enter "0" wherever required. Values in the first two columns and last column (the…
- Marla's Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table. Item Marla's Cafe Victory Club Earnings available for common stock $45,000 $8,000 Numbers of shares of common stock outstanding $50,000 $7,000 Market price per share $16 $30 Marla's Cafe has sufficient authorized but unissued shares to carry out the proposed merger. If the ratio of exchange is 1.8, what will be the earnings per share (EPS) based on the original shares of each firm?Prior to a potential merger Ross Co has 4500 shares outstanding at a market price per share of $31. Bulbs Inc has 2,800 shares outstanding at $18 per share. Assume Ross Co has estimated the valueof the synergistic benefits from acquiring Bulb Inc to be $3,500. Nowther firm has outstanding debt. The acquiring firm offered a price of $19.75 per share to the target. If the deal goes through, what is the merger premium? A) 4900 B) 3500 C) 2800 D) 6125 E) 0Data for Henry Company and Mayer Services are given in the following table. Henry Company is considering merging with Mayer by swapping 1.25 shares of its stock for each share of Mayer stock. Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging. Item Henry Company Mayor Services Earnings Available for Common Stock $225,000 $50,000 Number of Shares of Common Stock Outstanding $90,000 $15,000 Market Price per Share $45 $50 Calculate the ratio of exchange in market price. Calculate the earnings per share (EPS) and price/earnings (P/E) ratio for each company.