Apex Corporation is considering the purchase of Pinnacle Company in a stock-for-stock exchange. Selected data on the two companies are shown in the following table:Apex$750Pinnacle$215$100$ 3050303211$ 2.00$0.90$1.00$0.40161145%40%Sales (millions)Earnings after taxes (millions)Common shares outstanding (millions)Share priceEarnings per shareDividends per shareP/E ratioDividend payout ratioAssume that there are immediate synergistic benefits of $3 million if Apex and Pinnacle merge. Determine EPS for the combined company if Apex offers a (Round your answers to three decimal places):a. 20 percent premium for Pinnacle$b. 30 percent premium for Pinnacle$c. 40 percent premium for Pinnacle$

Earning per share is a ratio that shows the earing of investors on each share. It's a financial…

Answered: Apex Corporation is considering the…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented below. Cain Able Debt @ 10% $50,000 Debt @ 10% $100,000 Common stock 100,000 Common stock 50,000 Total $150,000 Total $150,000 Common shares 10,000 Common shares 5,000 a. Compute EPS if EBIT are $10,000, $15,000, and $50,000 (assume a 30 percent tax rate). (Round the final answers to 2 decimal places. Do not leave any empty spaces; input a 0 wherever it is required.) Cain Able EPS at $10,000 $ $ EPS at $15,000 $ $ EPS at $50,000 $ $ b. What is the relationship between EPS and level of EBIT? 1. Earnings before interest and taxes is less than cost of debt. (Click to select) 2. Earnings before interest and taxes equals cost of debt. (Click to select) 3. Earnings before interest and taxes is greater than cost of debt. (Click to select) c. If the cost of debt went up to 12 percent and all other factors remained equal, what would be the…
XYZ Corporation had the following balance sheet information: Total assets: $500,000Total liabilities: $200,000Shareholders' equity: $300,000If XYZ Corporation has 50,000 shares outstanding, what is the book value per share?
Linpro Industries is considering the acquisition of Odetics Inc. in a stock-for-stock exchange. Assume no immediate synergistic benefits are expected. Selected financial data on the two companies are shown below: Linpro Odetics Sales (millions) $480 $90 Net income (millions) $38 $10.4 Common shares outstanding (millions) 10 2.1 Earnings per share $3.80 $4.95 Common stock (price per share) $45.60 $74.25 Calculate Linpro's post-merger EPS if the Odetics shareholders accept an offer of $90 a share in a stock-for-stock exchange. Question 9Answer a. $4.38 b. $3.81 c. $4.29 d. $3.42
For example, GoTo completes its IPO on April 12, 2022 and is listed on the IDX. GOTO released 40,615,056,000 shares at a selling price of Rp. 338/unit with an underwriting discount of 5%. Investors in the secondary market pay only Rp. 300 per share of GoTo's outstanding shares of 50,000,000,000. Calculate: a. Total proceeds and net proceeds for IPO GoTo b. How much does the underwriting fee cost? c. What is the market capitalization for the outstanding GoTo shares? d. Calculate IPO underpricing and explain IPO underpricing for GoTo
A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows: Minnie Corporation Mickey Corporation Total earnings $1,682,000 $2,581,000 Number of shares of stock outstanding 290,000 890,000 EPS $5.80 $2.90 P/E ratio 10X 20X Market price per share $58 $58 a. On a share-for-share exchange basis, what will the postmerger EPS be? (Round the final answer to 2 decimal places.) Postmerger earnings per share $ b. If Mickey Corporation pays a 25 percent premium over the market value of Minnie Corporation, how many shares will be issued? (Do not round intermediate calculations.) Shares issued shares c. With the 25 percent premium, what will the postmerger EPS be? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Postmerger earnings per share $
Here is a simplified balance sheet for Locust Farming: Locust Farming Balance Sheet ($ in millions) Current assets $ 42,524 Current liabilities $ 29,755 Long-term assets 46,832 Long-term debt 27,752 Other liabilities 14,317 Equity 17,532 Total $ 89,356 Total $ 89,356 Locust has 657 million shares outstanding with a market price of $83 a share. c. How much value as the company created for its shareholders as a percent of shareholders’ equity, that is, the net capital contributed to the firm by its shareholders? (Enter your answer as a percentage rounded to the nearest whole number.)
Consider the financial statements for the REIT given below. Assume that the net revenue includes a loss of $4,000,000 on an asset sale. This REIT has issued 1,000,000 shares. Similar REITs are trading at FFO multiples of 10x. What valuation (share price) does this information imply for the REIT? Net Revenue Less: Less: Interest expense Net income O 49.2 O 129.2 O 95.2 89.2 Operating expenses Depreciation and amortization Income from operations $20,000,000 9,800,000 4,400,000 5,800,000 $ 1,280,000 $ 4,520,000

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