n plc is taking over Sum plc and has offered two Bin shares for every three Sum shares. You have the following information: Bin plc Sum plc Current share price: £3.01 £1.48 Number of shares: 20m 10m Market value: £60.2m £14.8m Distributable earnings: £5.6m £1.23m Synergy is expected to produce a 5% increase of the combined earnings. The market will apply a price/earnings ratio of 10.75 times to the new entity. What is the expected change in the wealth of Sum's shareholders? Answers: 10.2% 15.2% 25.7% 30.3% 35.6%

n plc is taking over Sum plc and has offered two Bin shares for every three Sum shares. You have the following information: Bin plc Sum plc Current share price: £3.01 £1.48 Number of shares: 20m 10m Market value: £60.2m £14.8m Distributable earnings: £5.6m £1.23m Synergy is expected to produce a 5% increase of the combined earnings. The market will apply a price/earnings ratio of 10.75 times to the new entity. What is the expected change in the wealth of Sum's shareholders? Answers: 10.2% 15.2% 25.7% 30.3% 35.6%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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