Advanced Financial Management (Custom Package)
17th Edition
ISBN: 9781323539439
Author: LOYOLA UNIV.
Publisher: PEARSON
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Question
Chapter 18, Problem 18.8P
a)
Summary Introduction
To determine: The number of share C Company has to issue to make the proposed merger.
Introduction:
Grouping of two or more companies and the identity of one company is taken by the resulting company is termed as mergers. Merger is where a large firm mergers the small firms.
b)
Summary Introduction
To determine: The post-merger earnings per share.
Introduction:
Grouping of two or more companies and the identity of one company is taken by the resulting company is termed as mergers. Merger is where a large firm mergers the small firms.
c)
Summary Introduction
To determine: The earnings earned on the behalf of the original shares of L Company.
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EPS and merger terms Expanding Corporation is interested in acquiring Target Company by swapping 0.4 share of its stock for each share of Target's stock. Expanding Co. has sufficient authorized but unissued shares to carry out the proposed merger. Certain financial data on these companies are given in the following table.
Item
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Target Co.
Earnings Available for common stock
$200,000
$50,000
Number of shares of common stock outstanding
50,000
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Earnings per share (EPS)
$4.00
$2.50
Market price per share
$50
$15
Price/earnings (P/E) ratio
12.5
6
How many new shares of stock will Expanding have to issue to make the proposed merger? If the earnings for each firm remain unchanged, what will the postmerger earnings per share be?
EPS and merger terms Expanding Corporation is interested in acquiring Target Company by swapping 0.4 share of its stock for each share of Target's stock. Certain financial data on these companies are given in the following table. Expanding Co. has sufficient authorized but unissued shares to carry out the proposed merger.
Item
Expanding Co.
Target Co.
Earnings Available for common stock
$200,000
$50,000
Number of shares of common stock outstanding
50,000
20,000
Earnings per share (EPS)
$4.00
$2.50
Market price per share
$50
$15
Price/earnings (P/E) ratio
12.5
6
How many new shares of stock will Expanding have to issue to make the proposed merger?
If the earnings for each firm remain unchanged, what will the post merger earnings per share be?
Cleveland Corporation is interested in acquiring Lewis Tool Company by swapping 0.4 share of its stock for each share of Lewis stock. Certain financial data on these companies are given in the following table.
Item Cleveland Corporation Lewis Tool
Earnings available for common stock $200,000 $50,000
Number of shares of common stock outstanding 50,000 20,000
Earnings per share (EPS) $4.00 $2.50
Market price per share $50.00 $15.00
Price/earnings (P/E) ratio 12.5 6
Cleveland has sufficient authorized but unissued shares to carry out the proposed merger.
How many new shares of stock will Cleveland have to issue to make the proposed merger?
If the earnings for each firm remain unchanged, what will the post-merger earnings per share be?
How much, effectively, has been earned on behalf of each of the original shares of Lewis stock?
How much, effectively, has been earned on behalf of each of the original shares of Cleveland Corporation’s stock?
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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