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 Pinnacle $890 $235 $120 $ 30 60 30 11 32 10 $ 2.00 $1.00 $ 1.20 $ 0.50 16 10 60% Sales (millions) Earnings after taxes (millions) Common shares outstanding (millions) Share price Earnings per share Dividends per share P/E ratio Dividend payout ratio 50% Assume that there are immediate synergistic benefits of $2 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. 50 percent premium for Pinnacle
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 Pinnacle $890 $235 $120 $ 30 60 30 11 32 10 $ 2.00 $1.00 $ 1.20 $ 0.50 16 10 60% Sales (millions) Earnings after taxes (millions) Common shares outstanding (millions) Share price Earnings per share Dividends per share P/E ratio Dividend payout ratio 50% Assume that there are immediate synergistic benefits of $2 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. 50 percent premium for Pinnacle
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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Ef 90.
Transcribed Image Text: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:
Pinnacle
$235
$ 30
30
10
$1.00
$ 0.50
10
50%
Sales (millions)
Earnings after taxes (millions)
Common shares outstanding (millions)
Share price
Earnings per share
Dividends per share
P/E ratio
Dividend payout ratio
$
b. 30 percent premium for Pinnacle
Apex
$890
$120
$
c. 50 percent premium for Pinnacle
$
60
32
$2.00
1.20
$
Assume that there are immediate synergistic benefits of $2 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
16
60%
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