Pay for the entire share capital

Assignment Help Financial Management
Reference no: EM131359060

The following information relates to two companies – A and B:

company A – earnings after tax 210 000 $, P/E 16

company B – earnings after tax 900 000 $, P/E 21

Bs management estimate that if they were to acquire A they could save 100 000 $ annually after tax on administrative costs in running the new joint company. Additionally, they estimate that the P/E ratio of the new company would be 18. Corporate tax rate is 18%

On the basis of these estimates, what is the maximum that the shareholders of B should pay for the entire share capital of A?

Reference no: EM131359060

What is your estimate of the stocks current price

A company currently pays a dividend of $4 per share (D0 = $4). It is estimated that the company's dividend will grow at a rate of 19% per year for the next 2 years, then at a

Portfolio manager of the delaware fund

Assume that you are the portfolio manager of the Delaware Fund, a $4 million mutual fund that contains the following stocks: Stock Amount Beta A $ 400,000 1.50 B $ 600,000 0.5

Issues an annual bond-what is the yield to maturity

A firm issues an annual bond today with a $1,000 face value, an 8% annual coupon interest rate, and 25-year maturity. An investor purchases the bond for $900. What is the yiel

What is the required reporting for discontinued operations

What is the required reporting for discontinued operations? The results of discontinued operations should be reported as an extraordinary item. The operating results of discon

The return on the stock account is expected

You are planning to save for retirement over the next 15 years. To do this, you will invest $1,100 a month in a stock account and $500 a month in a bond account. The return on

Common stock is currently trading

Summerdahl Resorts' common stock is currently trading at $21.00 per share. The stock is expected to pay a dividend of $1.50 a share at the end of the year (D1 = $1.50), and th

Stock has an annual return mean and standard deviation

DW Co. stock has an annual return mean and standard deviation of 10 percent and 31 percent, respectively. What is the smallest expected loss in the coming year with a probabil

Calculated growth rate is expected to continue

You buy a share of The Ludwig Corporation stock for $22.00. You expect it to pay dividends of $1.01, $1.17, and $1.3553 in Years 1, 2, and 3, respectively, and you expect to s

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd