Advanced Financial Management (Custom Package)
Advanced Financial Management (Custom Package)
17th Edition
ISBN: 9781323539439
Author: LOYOLA UNIV.
Publisher: PEARSON
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Marla's Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table. Item Marla's Cafe Victory Club Earnings available for common stock $45,000 $8,000 Numbers of shares of common stock outstanding $50,000 $7,000 Market price per share $16 $30 ​Marla's Cafe has sufficient authorized but unissued shares to carry out the proposed merger. If the ratio of exchange is 1.8​, what will be the earnings per share​ (EPS) based on the original shares of each​ firm?
Buyer Cafe is attempting to acquire the Target Club. Certain financial data on these corporations are summarized in the following table.   Item Buyer Cafe Target Club Earnings Available for common stock $20,000 $8,000 Number of shares of common stock outstanding   20,000    4000 Market price per share         $12      $24 EPS          $1       $2           Buyer’s Cafe has sufficient authorized but unissued shares to carry out the proposed merger.            If the ratio of exchange is 1.8, what will be the new earnings per share (EPS) of the merged firm?
M’s Club is attempting to acquire the V’s Club. Certain financial data on these corporations aresummarized in the following table.Item M’s Club V’s ClubEarnings available for common stock $20,000 $8,000Number of shares of common stock outstanding 20,000 4,000Market price per share $12 $24M’s Club has sufficient authorized but unissued shares to carry out the proposed merger.a. If the ratio of exchange is 1.8, what will be the earnings per share (EPS) based on the original sharesof each firm?b. Repeat part a if the ratio of exchange is 2.0.c. Repeat part a if the ratio of exchange is 2.2.d. Discuss the principle illustrated by your answers to parts a through c
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