Use the following information for the next 2 items: 2022 Formula One World Championship pre-season testing session just started and due to the porpoising safety issues of the Formula One cars of Mclaren Racing Limited, the price of its shares plummeted. This event gave Red Bull Racing Ltd. the opportunity to bugfy 45% of outstanding stocks of Mclaren Racing Ltd on March 5, 2022. It was noted that Red Bull Racing Ltd. owned 10% of the outstanding shares of Mclaren Racing Ltd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equity securities through profit or loss. The following information showed the book value and fair values of Mclaren Racing Limited on March 5, 2022. Book Value Fair Value Total Assets 12,070,000 15,300,000 Total Liabilities 2,140,000 2,140,000

Use the following information for the next 2 items: 2022 Formula One World Championship pre-season testing session just started and due to the porpoising safety issues of the Formula One cars of Mclaren Racing Limited, the price of its shares plummeted. This event gave Red Bull Racing Ltd. the opportunity to bugfy 45% of outstanding stocks of Mclaren Racing Ltd on March 5, 2022. It was noted that Red Bull Racing Ltd. owned 10% of the outstanding shares of Mclaren Racing Ltd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equity securities through profit or loss. The following information showed the book value and fair values of Mclaren Racing Limited on March 5, 2022. Book Value Fair Value Total Assets 12,070,000 15,300,000 Total Liabilities 2,140,000 2,140,000

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter15: Harvesting The Business Venture Investment

Section: Chapter Questions

Problem 1eM

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PLEASE PROVIDE SOLUTIONUse the following information for the next 2 items:2022 Formula One World Championship pre-season testing session just started and due to theporpoising safety issues of the Formula One cars of Mclaren Racing Limited, the price of its sharesplummeted. This event gave Red Bull Racing Ltd. the opportunity to bugfy 45% of outstandingstocks of Mclaren Racing Ltd on March 5, 2022.It was noted that Red Bull Racing Ltd. owned 10% of the outstanding shares of Mclaren RacingLtd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equitysecurities through profit or loss.The following information showed the book value and fair values of Mclaren Racing Limited onMarch 5, 2022.Book Value Fair ValueTotal Assets 12,070,000 15,300,000Total Liabilities 2,140,000 2,140,000Additional information are as follows:• Red Bull Racing Limited total consideration transferred amounted to P6,750,000 inclusiveof control premium of P250,000.• The fair value of…
2022 Formula One World Championship pre-season testing session just started and due to the porpoising safety issues of the Formula One cars of Toyota Racing Limited, the price of its shares plummeted. This event gave Honda Racing Ltd. the opportunity to bugfy 45% of outstanding stocks of Toyota Racing Ltd on March 5, 2022. It was noted that Honda Racing Ltd. owned 10% of the outstanding shares of Toyota Racing Ltd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equity securities through profit or loss. The following information showed the book value and fair values of Toyota Racing Limited on March 5, 2022. Book Value Fair Value Total Assets 12,070,000 15,300,000 Total Liabilities 2,140,000 2,140,000 Additional information are as follows: Honda Racing Limited total consideration transferred amounted to P6,750,000 inclusive of control premium of P250,000. The fair value of non-controlling interest is P5,500,000. 1.…
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It's 2023 and Rivian Automotive is about to go public. You want to estimate the appropriate price of the shares. Similar electric vehicle manufacturer companies that are public trade at an earnings-per-share/price of 0.05, and an enterprise value to sales of 12. Rivian has negative income of $10 per share and sales of $400 million. If Rivian has 100 million shares outstanding and no debt or excess cash, how much is each share worth? A). $200 B). $80 C). $24 D). $48
D Plc is in the process of making a 1 for 4 rights issue. The rights letters have just been sent to shareholders. The company currently has 20m K1 shares in issue and the current market price is K4.50 per share. The rights letter gives shareholders the right to buy their new shares for K3.50 each. D Plc plans to use the cash raised to build a major extension to its factory, thereby doubling production capacity. The finance director has received an angry letter from a shareholder. The shareholder complains that he cannot afford to invest in new shares. He contends that he is likely to suffer a loss because of the fact that the market will be flooded with cheap shares as the issue will almost certainly decrease the value of his holding. Required: I. Calculate the value at which the share price is likely to settle after the rights issue. II. Explain whether the shareholder’s complaint is justified with particular reference to the difference between the rights price and the current…