Homework Help is Here – Start Your Trial Now!
Business
Accounting
Question 2 Optimust Berhad (Optimust) is a manufacturing company. It is currently considering taking over another company, known as Bumblebeet Berhad (Bumblebeet). The board of directors of Optimust Berhad intends to make a bid soon and has now approached you to assist them to ascertain a value on Bumblebeet. You are given the following information: Optimust Bumblebeet Number of ordinary shares in issue 5 million 1 million Price per share RM5 RM3 Both Optimust and Bumblebeet are 100% owned by their shareholders. Optimust estimates that the value of the synergistic benefit from acquiring Bumblebeet is RM300,000. Optimust is evaluating two possible options as follows: i. To pay RM2.50 in cash for every share of Bumblebeet ii. To offer its 5% of unit shares in issue to Bumblebeet's shareholders From the above information you are required to: a. Calculate the value of Bumblebeet to Optimust. b. Determine the Net Present Value (NPV) for each option. c. Based on the NPV (in part b), choose the best option for Optimust. Interpret your findings to Optimust.

Question 2 Optimust Berhad (Optimust) is a manufacturing company. It is currently considering taking over another company, known as Bumblebeet Berhad (Bumblebeet). The board of directors of Optimust Berhad intends to make a bid soon and has now approached you to assist them to ascertain a value on Bumblebeet. You are given the following information: Optimust Bumblebeet Number of ordinary shares in issue 5 million 1 million Price per share RM5 RM3 Both Optimust and Bumblebeet are 100% owned by their shareholders. Optimust estimates that the value of the synergistic benefit from acquiring Bumblebeet is RM300,000. Optimust is evaluating two possible options as follows: i. To pay RM2.50 in cash for every share of Bumblebeet ii. To offer its 5% of unit shares in issue to Bumblebeet's shareholders From the above information you are required to: a. Calculate the value of Bumblebeet to Optimust. b. Determine the Net Present Value (NPV) for each option. c. Based on the NPV (in part b), choose the best option for Optimust. Interpret your findings to Optimust.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Question 2 Optimust Berhad (Optimust) is a manufacturing company. It is currently considering taking over another company, known as Bumblebeet Berhad (Bumblebeet). The board of directors of Optimust Berhad intends to make a bid soon and has now approached you to assist them to ascertain a value on Bumblebeet. You are given the following information: Optimust Bumblebeet Number of ordinary shares in issue 5 million 1 million Price per share RM5 RM3 Both Optimust and Bumblebeet are 100% owned by their shareholders. Optimust estimates that the value of the synergistic benefit from acquiring Bumblebeet is RM300,000. Optimust is evaluating two possible options as follows: i. To pay RM2.50 in cash for every share of Bumblebeet ii. To offer its 5% of unit shares in issue to Bumblebeet's shareholders From the above information you are required to: a. Calculate the value of Bumblebeet to Optimust. b. Determine the Net Present Value (NPV) for each option. c. Based on the NPV (in part b), choose the best option for Optimust. Interpret your findings to Optimust.
Transcribed Image Text:Question 2 Optimust Berhad (Optimust) is a manufacturing company. It is currently considering taking over another company, known as Bumblebeet Berhad (Bumblebeet). The board of directors of Optimust Berhad intends to make a bid soon and has now approached you to assist them to ascertain a value on Bumblebeet. You are given the following information: Optimust Bumblebeet Number of ordinary shares in issue 5 million 1 million Price per share RM5 RM3 Both Optimust and Bumblebeet are 100% owned by their shareholders. Optimust estimates that the value of the synergistic benefit from acquiring Bumblebeet is RM300,000. Optimust is evaluating two possible options as follows: i. To pay RM2.50 in cash for every share of Bumblebeet ii. To offer its 5% of unit shares in issue to Bumblebeet's shareholders From the above information you are required to: a. Calculate the value of Bumblebeet to Optimust. b. Determine the Net Present Value (NPV) for each option. c. Based on the NPV (in part b), choose the best option for Optimust. Interpret your findings to Optimust.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
steps

Unlock instant AI solutions

Tap the button
to generate a solution

SEE SOLUTION
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS