Company A has agreed to buy Company B for $48.00/share in stock. Company A andCompany B's stock prices on the day before announcement were $112.00 and $42.00respectively. Company B has 20 million shares outstanding, 12 million exercisable optionsoutstanding with an average exercise price of $28.00 per share, $120 million in net debt tobe assumed by Company A and minority interests of $25 million to be acquired for cash.1.345O 1.185LTM Net IncomeCalculate the enterprise to revenue multiple.O 0.9575Company B Income Statement ItemsO 1.275LTM RevenueLTM EBITDA$1000 million95 million60 million

Calculation of equity value of company B= Shares outstanding* share price= 20,000,000*48 =…

Answered: Company A has agreed to buy Company B…

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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Corporation is a regional company which is an SEC registrant. The Corp. has issued 20,000 units. Each unit consists of a $1,560 par value, 12% subordinated debenture and 20 shares of $10 par common stock. The units were sold to outside investors for cash at $1,848 per unit. Prior to this sale, the 2-week ask price of common stock was $52 per share. Twelve percent is a reasonable market yield for the debentures, and therefore the par value of the bonds is equal to the fair value. corporation's securities are thinly traded on NASDAQ. (a) Prepare the journal entry to record Corp.'s transaction, under the following conditions. List all debit entries before credit entries. Do not round intermediate calculations. Round final answers to 0 decimal places. 1. Employing the incremental method. 2. Employing the proportional method, assuming the recent price quote on the common stock reflects fair value. No. Account Titles and Explanation Debit Credit 2.
Eagle Security Co. has just gone public. Under a firm commitment agreement, the firm received $36.50 for each of the 7.25 million shares sold. The initial offering price was $38.75 per share, and the stock rose to $42.65 per share in the first few minutes of trading. The firm paid $2,285,000 in direct legal and other costs and $988,000 in indirect costs. What was the underwriters' spread of this offer?
Nets & Flicks would like to take over Jeff & Bezos. Both companies are debt-free. For that, Nets & Flicks is offering to Jeff & Bezos cash and cash-like equivalents in the total amount of $73,000. Nets & Flicks currently has a total of 1,750 shares, and the market value of each share is $20. Jeff & Bezos, on the other hand, currently has a total of 2,500 shares, and the market value of each share is $28. The merger of these two companies would have a $5,000 incremental value if it is successful. The net present value of the merger from the point of view of Nets & Flicks equals. Multiple Choice $3,000 $4,000 $2,000 $5,000 $6,000
Raghubhai
Venture plc has issues ordinary shares of 20 million £1.00 shares. On 7th June, the Stock Exchange closing price of the shares was £12.00. Early on the morning of 8th June, the business publicly announced that its plan to acquire another business. On 9th June, the business announced its intention to raise the necessary money to finance the acquisition, totaling £100 million, through a rights issue priced at £8.00 per share. Required: (a) Determine how many new shares need to issue and the theoretical ex-rights price. (b) Calculate the value of rights per existing share and the effect on the wealth of a person who owns 200 shares in Venture plc before the rights issue, in each case where the shareholder takes up the rights, sells the rights and does nothing. (c) Discuss why companies make rights issues of equity, rather than raising the equity in some other way.
LYFT IPO was issued at $72/share. Before the IPO, Lyft had 240 million class A shares outstanding and wanted to issue additional 30 million class A shares. On top of that, Lyft gave its underwriters options to purchase another 5 million shares at $72 each. When Lyft stock price fell below the IPO price of $72, to support the stock price, up to how many shares the underwriters could buy from the open market without losing money? 5 million shares 30 million shares 35 million shares 240 million shares 275 million shares
In the IPO, the firm issued 3,000,000 new shares. The initial price was $18.00/share with investment bankers retaining $1.26 as fees. The final first-day closing price was $23.50. 1. What were the total proceeds from this offering

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