assignment 7

P9

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QUESTION 17 Suppose you purchase one share of the stock of Cereal Correlation Company at the beginning of year 1 for $50. At the end of year 1, you receive a $1 dividend and buy one more share for $72. At the end of year 2. you receive total dividends of $2 (.e. $1 for each share) and sell the shares for $67.20 each The time-weighted return (geometric) on your investment is O 10.06%. O 8.77%. 19.73%. 17.60%.

Question 10?

solve b c and d

Acquirer Target Newco Net Income 3500 1050 4495 No. of shares 2500 1100 4075 3600 EPS 1.4 0.95 Stock Price 31 36.5 PE 22.1 38.2 Ratio Ratio of Earnings to buyer 30.00% Dollar Value of Bid 44.3 Premium over target 21% Ratio of PE Paid to PE of Buyer 2.1 Answer 2 questions: 1. Is the deal accretive or dilutive? 2. How much in dollar terms, and percentage, is the deal accretive or dilutive?

13 ng: 00:50:28 Submit Test This Question: 1 pt 25 of 30 (18 complete) is Test: 30 pts p. Matilda Industries pays a dividend of $2.45 per share and is expected to pay this amount indefinitely. If Matilda's equity cost of capital is 9%, which of the following would be expected to be closest to Matilda's stock price? A. $27.22 B. $21.78 O C. $34.03 O D. $16.33 Click to select your answer. 000

QUESTION 4 (a) XYZ Ltd is analysing the possible acquisition of ABC Group. The current market value of xyz Ltd is K8 million and ABC Group Pty Ltd is K6 million. It is estimated that the merger will generate a total annual after-tax cash flow of K1 million. The appropriate discount rate is for the incremental cash flow is 10%. Two offers are proposed: 1. Offer 50% of its shares 2. K6.5 million in cash. i) What is the cost of each alternative? What is the NPV of each alternative? ii) iii) Which alternative should XYZ use? iv) Which alternative should ABC want?

Plz correct solution.

A22

Quiz Q1

Effects of a Stock Exchange [LO3] Consider the following premerger information about Firm A and Firm B: Total earnings Shares outstanding Price per share Firm A $4,350 1,600 $ 43 Firm B $1,300 400 $ 47 Assume that Firm A acquires Firm B via an exchange of stock at a price of $49 for each share of B's stock. Both Firm A and Firm B have no debt outstanding. a. What will the earnings per share (EPS) of Firm A be after the merger? b. What will Firm A's price per share be after the merger if the market incorrectly analyzes this reported earnings growth (that is, the price-earnings ratio does not change)? c. What will the price-earnings ratio of the postmerger firm be if the market cor- rectly analyzes the transaction? d. If there are no synergy gains, what will the share price of Firm A be after the merger? What will the price-earnings ratio be? What does your answer for the share price tell you about the amount Firm A bid for Firm B? Was it too high? Too low? Explain.

Solve acc

mc attached

If Chester Corp. were to buy all of it's shares outstanding at its current price, how much would it cost Chester Corp, excluding brokerage fees? Select 1 $90 million $86 million $2 million $176 million Save Answer

Question two The possible returns and associated probabilities of two shares, A and B Share A Share B РА RA (%) PB RB (%) 0.05 0.25 0.40 10 0.05 12 15 0.25 18 22 0.40 28 0.25 25 0.25 32 0.05 30 0.05 38 1.00 1.00 Calculate expected retum and Risk