Procta Ltd is determined to report earnings per share of R9.5. It therefore acquires JJ&J Company. You are given the following facts Proctas Ltd JJ&J Merged firm Earnings per share R6.50 R8 R9.50 Price per share R36 R21 ? Price-earnings ratio 18 7 ? Number of shares 50000 60000 ? Total earnings R325,000 R480,000 ? Total market value R5,850,000 R3,360,000 ? Once again there are no gains from merging. In exchange for JJ&J shares,Proctas Ltd issues just enough of its own shares to ensure its R2.67 earnings per share objective. a. Complete the above table for the merged firm. c. What is the cost of the cash offer if proctas ltd paid R2500000 for JJ&J?
Procta Ltd is determined to report earnings per share of R9.5. It therefore acquires JJ&J Company. You are given the following facts Proctas Ltd JJ&J Merged firm Earnings per share R6.50 R8 R9.50 Price per share R36 R21 ? Price-earnings ratio 18 7 ? Number of shares 50000 60000 ? Total earnings R325,000 R480,000 ? Total market value R5,850,000 R3,360,000 ? Once again there are no gains from merging. In exchange for JJ&J shares,Proctas Ltd issues just enough of its own shares to ensure its R2.67 earnings per share objective. a. Complete the above table for the merged firm. c. What is the cost of the cash offer if proctas ltd paid R2500000 for JJ&J?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Procta Ltd is determined to report earnings per share of R9.5. It therefore acquires JJ&J Company. You are given the following facts
| Proctas Ltd | JJ&J | Merged firm | |
| Earnings per share | R6.50 | R8 | R9.50 |
| Price per share | R36 | R21 | ? |
| Price-earnings ratio | 18 | 7 | ? |
| Number of shares | 50000 | 60000 | ? |
| Total earnings | R325,000 | R480,000 | ? |
| Total market value | R5,850,000 | R3,360,000 | ? |
Once again there are no gains from merging. In exchange for JJ&J shares,Proctas Ltd issues just enough of its own shares to ensure its R2.67 earnings per share objective.
a. Complete the above table for the merged firm.
c. What is the cost of the cash offer if proctas ltd paid R2500000 for JJ&J?
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