QUESTION TWo The following data are pertinent for companies A and B. A B Present Earnings No of shares Shs 20 million 10 million Shs 4 million 1 million 10 Price/earning ratio 18 a. If the two...


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QUESTION TWo<br>The following data are pertinent for companies A and B.<br>A<br>B<br>Present Earnings<br>No of shares<br>Shs 20 million<br>10 million<br>Shs 4 million<br>1 million<br>10<br>Price/earning ratio<br>18<br>a. If the two companies were to merge and the exchange ratio were one<br>share of Company A for each share of Company B, what would be the<br>initial impact on earnings per share of the two companies? what is the<br>market value exchange ratio? Is the merger likely to take place?<br>If the exchange ratio were two shares of Company A for each share of<br>Company B what would happen with respect to the above?<br>If the exchange ratio were 1.5 shares of Company A for each share of<br>Company B, what would happen?<br>What exchange ratio would you recommend?<br>b.<br>C.<br>d.<br>

Extracted text: QUESTION TWo The following data are pertinent for companies A and B. A B Present Earnings No of shares Shs 20 million 10 million Shs 4 million 1 million 10 Price/earning ratio 18 a. If the two companies were to merge and the exchange ratio were one share of Company A for each share of Company B, what would be the initial impact on earnings per share of the two companies? what is the market value exchange ratio? Is the merger likely to take place? If the exchange ratio were two shares of Company A for each share of Company B what would happen with respect to the above? If the exchange ratio were 1.5 shares of Company A for each share of Company B, what would happen? What exchange ratio would you recommend? b. C. d.

Jun 06, 2022
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