Advanced Financial Management (Custom Package)
17th Edition
ISBN: 9781323539439
Author: LOYOLA UNIV.
Publisher: PEARSON
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Question
Chapter 18, Problem 18.11P
a)
Summary Introduction
To determine: The ratio of exchange of shares in market price.
Introduction:
The market price of the acquiring firm is exchange with market price of targeted firm is termed as ratio of exchange in market price.
b)
Summary Introduction
To determine: EPS and PER of both the company.
c)
Summary Introduction
To determine: The price earnings ratio used to purchase M Company
d)
Summary Introduction
To determine: The post-merger EPS of H Company.
e)
Summary Introduction
To determine: The expected market price of the merged firm.
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Data 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 price/earnings (P/E) ratio used to purchase Mayer Services.
Calculate the post-merger earnings per share (EPS) for Henry Company.
Calculate the expected market price per share of the merged firm. Discuss this result in light of your findings in part a.
EPS and postmerger price Data for Henry Company and Mayer Services are given in the following table. Henry Company is considering merging with Mayer by swap-ping 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 Mayer 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
d. Calculate the postmerger earnings per share (EPS) for Henry Company?
EPS and postmerger price Data for Henry Company and Mayer Services are given in the following table.Henry Company is considering merging with Mayer by swap-ping 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 Mayer 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
C. Calculate the price/earnings (P/E) ratio used to purchase Mayer Services.
Chapter 18 Solutions
Advanced Financial Management (Custom Package)
Ch. 18.1 - Prob. 18.1RQCh. 18.1 - Prob. 18.2RQCh. 18.1 - Prob. 18.3RQCh. 18.2 - Prob. 18.4RQCh. 18.2 - Prob. 18.5RQCh. 18.3 - Prob. 18.6RQCh. 18.3 - What is the ratio of exchange? Is it based on the...Ch. 18.3 - Prob. 18.8RQCh. 18.3 - Prob. 18.9RQCh. 18.3 - Prob. 18.10RQ
Ch. 18.3 - Prob. 18.11RQCh. 18.3 - Prob. 1GFCh. 18.4 - Prob. 1FOECh. 18.4 - Prob. 18.12RQCh. 18.4 - Define an extension and a composition, and explain...Ch. 18.5 - Prob. 18.14RQCh. 18.5 - What is the concern of Chapter 71 of the...Ch. 18.5 - Indicate in which order the following claims would...Ch. 18 - Prob. 1ORCh. 18 - Prob. 18.1STPCh. 18 - Prob. 18.2STPCh. 18 - Prob. 18.1WUECh. 18 - Prob. 18.2WUECh. 18 - Prob. 18.3WUECh. 18 - Prob. 18.4WUECh. 18 - Prob. 18.5WUECh. 18 - Tax effects of acquisition Connors Shoe Company is...Ch. 18 - Tax effects of acquisition Trapani Tool Company is...Ch. 18 - Prob. 18.3PCh. 18 - Prob. 18.4PCh. 18 - Cash acquisition decision Benson Oil is being...Ch. 18 - Prob. 18.6PCh. 18 - Prob. 18.7PCh. 18 - Prob. 18.8PCh. 18 - Prob. 18.9PCh. 18 - Prob. 18.10PCh. 18 - Prob. 18.11PCh. 18 - Prob. 18.12PCh. 18 - Prob. 18.13PCh. 18 - Prob. 18.14PCh. 18 - Prob. 18.15PCh. 18 - Prob. 18.16PCh. 18 - Prob. 18.17P
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