52 The Board of Directors of MAT Corporation is planning to make a big acquisition in the next fiscal year. The company hired a merger and acquisition (M&A) consultant to conduct a financial feasibility study using what-if analysis. The consultant and the company’s financial analyst have developed the following data table for the four top target companies from the pre-final list. Item Target Co. 1 Target Co. 2 Target Co. 3 Target Co. 4 EPS $2 $10 $5 $3 Mkt Price $40 $100 $75 $63   Based on the data table, which of the following target companies is the most expensive company to acquire using the price/earnings (P/E) ratio as the criteria? Group of answer choices Target Co. 4 Target Co. 2 Target Co. 1 Target Co. 3

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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52

The Board of Directors of MAT Corporation is planning to make a big acquisition in the next fiscal year. The company hired a merger and acquisition (M&A) consultant to conduct a financial feasibility study using what-if analysis. The consultant and the company’s financial analyst have developed the following data table for the four top target companies from the pre-final list.

Item

Target Co. 1

Target Co. 2

Target Co. 3

Target Co. 4

EPS

$2

$10

$5

$3

Mkt Price

$40

$100

$75

$63

 

Based on the data table, which of the following target companies is the most expensive company to acquire using the price/earnings (P/E) ratio as the criteria?

Group of answer choices
Target Co. 4
Target Co. 2
Target Co. 1
Target Co. 3
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