An acquirer with a P/E ratio of 13 and earnings of $1.99 seeks to take over another target firm with value $15.83 and P/E ratio 17. What is the new merged firm's P/E?
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- Good Investments Company forecasts a $2.44 dividend for 2017, $2.62 dividend for 2018 and a $2.77 dividend for 2019 for Mountain Vacations Corporation. For all years after 2019, Good Investments Company forecasts that Mountain Vacations will pay a $2.94 dividend.Using the dividend discount valuation model determine the intrinsic value of Mountain Vacations Corporation, assuming the company's cost of equity capital is 7%.For each situation described below, find the following items ignoring any costs other than thepurchase price.a) the total purchase priceb) the total dividend amountif applicable c) the capital gain or lossd) the total returne) the percentage return 1. Mila bought 50 shares of American EagleOutfitters stock on May 23, 2018, paying$22.01 per share. On May 22, 2020, shereceived dividends of $1.10 per share, and thestock price had fallen to $8.95 per share.When analysing a company, the equity sales person has noticed that the company has incurred a large development cost relating to a new product and has stated that the costs meet the necessary criterion to be capitalised. The analyst feels a more reasonable treatment of this item would be to expense it, in the year incurred. The company has a tax rate of 30%. The company acquires 100% of shares in another company called Horizon for cash of £4.8 million. Net assets Horizon are £3.3m.There is an upward fair value adjustment of £0.4 m required to the acquirees’ net assets. The acquired company has a 0.2, in process development costs that have not been previously recognised but now meet the necessary capitalisation criteria. Explain how a company could acquire intangible assets. With regard to the development costs, what will be the implication for the financial statements of the two different approaches? Include any relevant ratios.
- Good Investments Company forecasts a $1.57 dividend for 2017, $1.68 dividend for 2018 and a $1.78 dividend for 2019 for Mountain Vacations Corporation. For all years after 2019, Good Investments Company forecasts that Mountain Vacations will pay a $1.89 dividend.Using the dividend discount valuation model determine the intrinsic value of Mountain Vacations Corporation, assuming the company’s cost of equity capital is 7%. Select one: a. $26.43 b. $22.02 c. $17.66 d. $24.99Albion Inc. provided the following information for its most recent year of operations. The tax rate is 40%. Required: 1. Compute the following: (a) return on sales, (b) return on assets, (c) return on stockholders equity, (d) earnings per share, (e) price-earnings ratio, (f) dividend yield, and (g) dividend payout ratio. 2. CONCEPTUAL CONNECTION If you were considering purchasing stock in Albion, which of the above ratios would be of most interest to you? Explain.On January 1, 2020, Alice Company purchased 40,000 shares of Jasper at P100 per share. The investment is measured at fair value through other comprehensive income. Brokerage fees amounted to P120,000. A P5 dividend per share of Jasper had been declared on December 15, 2019, to be paid on March 31, 2020 to shareholders of record on January 31, 2020. No other transactions occurred in 2020 affecting the investment in Jasper's share. What is the initial measurement of the investment?
- he Net Profit of ABC company for the year 2019 was OMR 11,400. The company issued 40,000 6% preference shares of OMR 1 each. What will be the Net Profit after distributing preference dividend? a. OMR 0 b. OMR 9,000 c. OMR 10,000 d. OMR 13,800\Choose the correct. Perez, Inc., applies the equity method for its 25 percent investment in Senior, Inc. During 2018, Perez sold goods with a 40 percent gross profit to Senior, which sold all of these goods in 2018. How should Perez report the effect of the intra-entity sale on its 2018 income statement?a. Sales and cost of goods sold should be reduced by the amount of intra-entity sales.b. Sales and cost of goods sold should be reduced by 25 percent of the amount of intra-entity sales.c. Investment income should be reduced by 25 percent of the gross profit on the amount of intra-entity sales.d. No adjustment is necessary.The following information relates to the acquisition of M plc by D plc: Recent dividend of M plc: 20p per share Expected dividend growth of M plc: 3% per year Cost of equity of D plc: 10% Number of shares of D plc: 20 million Cost of equity of M plc: 8% Number of shares of M plc: 15 million What is the market value suggested by the dividend valuation model? Answers: £82.4 million £63.6 million £61.8 million £58.9 million £44.1 million
- Wonda Inc aims to acquire Ovaltime Ltd in the near future. As an analyst, you have compiled the data as follows:As per the table is shown above, calculate the following:a) of shares to be issued by the acquirerb) Post-merger EPSc) Post-merger P/E if market is efficientd) Post-merger P/E if market is not efficiente) One-day after the M&A process, the new company stock price becomes Rm 10, with 3-month T-bills 5%, bursa Malaysia return was 12% with risk premia of 0.8. Is there any abnormal return from the M&A Process? Prove it.A company has a reported net income of RM12 million and 60million shares outstanding.a) Estimate the stock’s market price if the price earning (P/E)ratio is 14.0b) What is the company’s value by market capitalization?The following investment-related transactions were completed by LackyCorp. during 2020 - Purchased 30,000 shares of Y Company ordinary shares at P125 per share plus brokerage fees of P28,500. Lackyclassified this stock as non-trading security (FVTOCI) -Sold 4,500 shares of Y Company at P132 per share. a.At what amount should the Y Company shares be measured on initial recognition? b.How much is the realized gain or loss on the sale of Y Company shares?
