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The shareholders of Jolie Company have voted in favor of a buyout offer from Pitt Corp. Information about each firm is given Jolie Pitt Price-earnings ratio 13.5 21 Shares Outstanding 75,000 210,000 Earnings 150,000 810,000 Jolies shareholders will receive one share of Pitt stock for every three shares they hold in Jolie. a) What will the EPS of Pitt be after the merger? What will the PE ratio be if the NPV os the acquisition is zero? b) What must Pitt feel is the value of the synergy between these two firms? Explain how your answer can be reconciled with the decision to go ahead with the takeover.
All bonds have some common characteristics, but they do not always have the same contractual features. Differences in contractual provisions, and in the underlying strength of the companies backing the bonds, lead to major differences in bonds risks,..
Bond x pays an 8% annual coupon and bond y pays a 4% annual coupon. Both bonds have 10 years to maturity. The yield to maturity for both bonds is now 8%. Which bond has more interest rate risk? Why? Assume that you have an opportunity to buy the stoc..
Helen is considering an investment of $3,500 each year for 18 years, starting at the end of the this year. The investment will pay 5 % interest. How much will this investment ($) be worth at the end of the 12 years?
The FIRE 317 Fund has $240 million in assets, $100,000 in liabilities, and it sells at a 7 percent discount to NAV. If the quoted share price for this closed-end fund is $14.8738, how many shares are outstanding? If you purchase 1,000 shares of this ..
describe a fictitious company and provided its background. then you are ready to start building the marketing plan with
(Stock dividends) In the spring of 2014 the CFO of Placebo Pharmaceuticals, Inc. took a proposal to the firm's board of directors to distribute a noncash dividend to the firm's shareholders in the form of new shares of common stock. After paying the ..
How much more money is required to fund an ordinary perpetuity than a 35-year ordinary annuity, if the funds can earn 8% compounded quarterly, and both pay $700 monthly? (Do not round intermediate calculations and round your final answer to 2 decimal..
Cost of Common Equity and WACC Patton Paints Corporation has a target capital structure of 30% debt and 70% common equity, with no preferred stock. Its before-tax cost of debt is 11% and its marginal tax rate is 40%. The current stock price is P0 = $..
Cities A and B are 24 miles apart. City A has a population of 23,700; City B has a population of 26,200. The break point according to Reilly’s law is:
often organizations enter the marketplace with one approach and model. as the economy and demands shift and technology
Southern Energy Exploration reports that the corporation’s assets are valued at $480,000,000, its liabilities are 100,000,000, and it has issued 60,000,000 shares of stock. What is the book value for a share of Southern Energy stock?
Suppose that you will receive annual payments of $21,400 for a period of 22 years. The first payment will be made 7 years from now. If the interest rate is 7.50%, what is the value of the annuity in year 6, What is the current value of this stream of..
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