ABC Corporation will be acquiring XYZ Corporation. The latter's fair value has not yet been determined. ABC would be valuing it using relative valuation based on three of its competitors using the price earnings ratio. Relevant information are as follows: Red Inc. Blue Company Yellow Corp. Equity Market Value ℗ 3,000,000.00 460,000.00 Earnings ABC foresees that upon the acquisition, XYZ will increase its current annual earnings of P360,000 by 25%. What is the value of control over XYZ from the point of view of ABC? 2,500,000.00 P 380,000.00 2,800,000.00 410,000.00
ABC Corporation will be acquiring XYZ Corporation. The latter's fair value has not yet been determined. ABC would be valuing it using relative valuation based on three of its competitors using the price earnings ratio. Relevant information are as follows: Red Inc. Blue Company Yellow Corp. Equity Market Value ℗ 3,000,000.00 460,000.00 Earnings ABC foresees that upon the acquisition, XYZ will increase its current annual earnings of P360,000 by 25%. What is the value of control over XYZ from the point of view of ABC? 2,500,000.00 P 380,000.00 2,800,000.00 410,000.00
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 5P
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![ABC Corporation will be acquiring XYZ Corporation. The latter's fair value has not yet been
determined. ABC would be valuing it using relative valuation based on three of its
competitors using the price earnings ratio. Relevant information are as follows:
Red Inc.
Blue Company
3,000,000.00
460,000.00
Equity Market Value
Earnings
2,500,000.00
380,000.00
Yellow Corp.
2,800,000.00
410,000.00
ABC foresees that upon the acquisition, XYZ will increase its current annual earnings of
P360,000 by 25%. What is the value of control over XYZ from the point of view of ABC?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4816de08-a547-45e0-8042-36ea890da779%2F6e92196e-b0f6-4fdf-b074-16506df6a2dc%2Fu9cggjh_processed.png&w=3840&q=75)
Transcribed Image Text:ABC Corporation will be acquiring XYZ Corporation. The latter's fair value has not yet been
determined. ABC would be valuing it using relative valuation based on three of its
competitors using the price earnings ratio. Relevant information are as follows:
Red Inc.
Blue Company
3,000,000.00
460,000.00
Equity Market Value
Earnings
2,500,000.00
380,000.00
Yellow Corp.
2,800,000.00
410,000.00
ABC foresees that upon the acquisition, XYZ will increase its current annual earnings of
P360,000 by 25%. What is the value of control over XYZ from the point of view of ABC?
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