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Chapter 18, Problem 18.10P

a)

Summary Introduction

To determine: Earnings per share for Company G&S for the each of the next 5 years without the merger.

Introduction:

Grouping of two or more companies and the identity of one company is taken by the resulting company is termed as mergers. Merger is where a large firm mergers the small firms.

b)

Summary Introduction

To determine: The earnings of G Company in each of the next 5 years.

Introduction:

Grouping of two or more companies and the identity of one company is taken by the resulting company is termed as mergers. Merger is where a large firm mergers the small firms.

c)

Summary Introduction

To construct: The graph of premerger and post-merger EPS

d)

Summary Introduction

To discuss: The recommendation on the above parts for G&S Company

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You've collected the following information from your favorite financial website. 52-Week Price Dividend Hi 77.40 Lo Stock (Dividend) Yield % PE Ratio Close Price Net Change 10.43 Acevedo .36 2.6 6 13.90 -.24 55.81 33.42 Georgette, Incorporated 1.54 3.8 10 40.43 -.01 131.04 70.05 YBM 2.55 2.9 10 89.08 3.07 50.24 35.00 13.95 Manta Energy .80 5.2 6 20.74 Winter Sports .32 1.5 28 15.43 ?? -.26 .18 According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 21 percent. Suppose YBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.75 percent, indefinitely. Assume investors require a return of 14 percent on YBM stock. According to the dividend growth model, what should the stock price be today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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EBK CONTEMPORARY FINANCIAL MANAGEMENT
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ISBN:9781337514835
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Publisher:CENGAGE LEARNING - CONSIGNMENT