What are the factors that determine whether the company should use cash acquisition or stock acquisition?
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- What are the factors that determine whether the company should use cash acquisition or stock acquisition?
- Discuss five different defensive tactics that the target company can use to thwart this takeover attempt.
3) What are the possible cash flow benefits from this acquisition?
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- Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the companys financial statements for the 2 most recent years. Required: Note: Round all answers to two decimal places. 1. Compute the following for each year: (a) return on assets, (b) return on stockholders equity, (c) earnings per share, (d) price-earnings ratio, (e) dividend yield, and (f ) dividend payout ratio. 2. CONCEPTUAL CONNECTION Based on the analysis in Requirement 1, would you invest in the common stock of Kepler?4. Prenda Inc. reported a net income of P750,000. The company has 250,000 shares of common stock and it is currently trades at P45 per share. The company continue to expand and anticipates that one year from now, its net income will be P1,250,000. Over the year, the company anticipates issuing additional 100,000 shares of stock, so that one year from now the company will have 350,000 shares of commons stock. Assuming the company’s price/earnings ratio remain at its current level, what will be the company’s stock price one year from now? 5. You are considering the purchase of Pasaha Company stock. You anticipate that the company will pay dividend of P2.25 per share next year and P2.50 per share the following year. You believe that you can sell the stock for P18.50 per share two years from now. If your required rate of return is 12.5%, what is the maximum price you would pay for a share? 6. You are considering to purchase of Havana Company Stocks. The firm has just paid a dividend of…Please provide answer to below three requirements Question: Lava Lamps Inc. had $800 million in earnings before interest and taxes last year. It has just acquired a 50% stake in General Lamps Inc., which had $400 million in earnings before interest and taxes last year. Because Lava Lamps has a major- ity active stake, it has been asked to consolidate last year's income statements for the two firms. a. What earnings before interest and taxes would you see in the consolidated statement? b. If both firms have a 5% stable growth rate, a 10% cost of capital, a 40% tax rate, and a return on capital of 11%, estimate the value of equity in Lava Lamps. c. How would your answer change if you were told that General Lamps has a 9% cost of capital and a 15% return on capital?
- Ferrell Inc. recently reported net income of $8 million. It has 710,000 shares of common stock, which currently trades at $57 a share. Ferrell continues to expand and anticipates that 1 year from now, its net income will be $13.6 million. Over the next year, it also anticipates issuing an additional 248,500 shares of stock so that 1 year from now it will have 958,500 shares of common stock. Assuming Ferrell's price/earnings ratio remains at its current level, what will be its stock price 1 year from now? Do not round intermediate calculations. Round your answer to the nearest cent.1. Over the years, Masterson Corporation’s stockholders have provided $34,000,000 of capital when they purchased new issues of stock and allowed management to retain some of the firm’s earnings. The firm now has 2,000,000 shares of common stock outstanding, and the shares sell at a price of $28 per share. How much value has Masterson’s management added to stockholder wealth over the years, that is, what is Masterson’s MVA? 2. Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm’s EVA? 3. Laiho Industries’s 2017 and 2018 balance sheets (in thousands of dollars) are shown.2018 2017Cash $102,850 $ 89,725Accounts receivable 103,365 85,527Inventories 38,444 34,982Total current assets $244,659 $210,234Net fixed assets 67,165 42,436Total assets $311,824 $252,670Accounts payable $ 30,761 $ 23,109Accruals 30,477 22,656Notes payable 16,717…Brenda Limited has an enterprise value of $10 million, total debt of $4 million and 2 million shares outstanding. The latest balance sheet of the firm reports assets worth $8 million. The per-share market value of the equity is: Select one: a. $2.00 b. $3.00 c. $4.00 d. $5.00
- Simpson Department StoreSimpson Department Stores operates retail department store chains throughout the United States. At the end of Year 10, Simpson reports debt of $5,897 million and common shareholders' equity at book value of $4,400 million. The market value of its common stock is $6,895, and its market equity beta is 0.79. An equity buyout group is considering an LBO of Simpson as of the beginning of Year 11.The group intends to finance the buyout with 25 percent common equity and 75 percent debt carrying an interest rate of 10.65 percent.Regarding the equity buyout, compute the cost of equity capital with the new capital structure that results from the LBO. Assume a risk-free rate of 3.75 percent and a market risk premium of 5.0 percent. Round your answer to three decimal places. Cost of Equity Capital is _______________________________Ferrell Inc. recently reported net income of $8 million. It has540,000 shares of common stock, which currently trades at $21 a share. Ferrell continuesto expand and anticipates that 1 year from now its net income will be $13.2million. Over the next year, it also anticipates issuing an additional 81,000 shares ofstock so that 1 year from now it will have 621,000 shares of common stock. AssumingFerrell’s price/earnings ratio remains at its current level, what will be its stock price1 year from now?3. In December 2020, Nachil Co. had a share price of AED 60. They had 32 million shares outstanding, a market-to-book ratio of 10. In addition, Nachil had AED 250 million debt, AED 65 million in net income, AED 48 million in retained earnings, AED 637 in sales. Calculate P/E ratio and ROE according to Du Pont system.
- Babel Co. a publicly listed company, reported earnings for the year amounting to Php 25 million with outstanding shares of 1 million. The market value per share of Babel Co. is Php 122. What is the P/E Ratio of Babel Co. (round your answer to the nearest ones)? Suppose that Babel Co. sets as the industry leader, Vincenzo Co., another player in the same industry are being eyed by an investor. The reported EPS of Vincenzo Co. is Php 10. If the investor is aware of the Babel Co.’s performance, how much should the investor value Vincenzo Co.?Please answer this two problems and provide complete solutions in good accounting form. Thank you! 1. Kremlin Company reported the following shareholders' equity at year-end: Share capital, P30 par value, P3,000,000; Share premium, P600,000; Retained earnings, P4,200,000. A 20% share dividend was declared and distributed at year-end when entity's share was selling at P65. What amount should be reported as share capital outstanding? 2. Victory Company issued 8,000 ordinary shares with P200 par value and 20,000 preference shares with P200 par value for a total consideration of P7,500,000. At the date of issue, the ordinary share was selling for P360 and the preference share was selling for P270. What is the share premium from the issuance of ordinary shares?1. Flubber Products has current assets of $60,000 and total assets of $340,000. The firm’s sales are $700,000. Flubber’s interest expense is $25,000. All assets are classified as being either current assets or fixed assets. Flubber’s fixed asset turnover is 2. Milton Data Service just paid a dividend of $4.00 per share on its common stock. The dividend is expected to grow at 4% per year forever. Milton has net working capital of $500 million. Currently, the risk-free rate is 5%, the required market return is 10%, and Milton has a beta of 1.4. a. What should be the current market price per share (i.e., the intrinsic value) of Milton stock? b. If the actual market price per share is $56, is Milton undervalued or overvalued? How much is the stock mispriced? 3. I’m Eating Restaurants is expected to pay a dividend of $5.00 per share on its common stock in one year. The dividend is expected to grow at 4% per year forever. Investors require a 12% rate of return on stocks with I’m Eating’s…