The number of share C Company has to issue to make the proposed 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.

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Answer 1

Question

Chapter 18, Problem 18.8P

a)

Summary Introduction

To determine: The number of share C Company has to issue to make the proposed 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 post-merger earnings per share.

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 determine: The earnings earned on the behalf of the original shares of L Company.

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Cleveland Corporation is interested in acquiring Lewis Tool Company by swapping 0.4 share of its stock for each share of Lewis stock. Certain financial data on these companies are given in the following table. Item Cleveland Corporation Lewis Tool Earnings available for common stock $200,000 $50,000 Number of shares of common stock outstanding 50,000 20,000 Earnings per share (EPS) $4.00 $2.50 Market price per share $50.00 $15.00 Price/earnings (P/E) ratio 12.5 6 Cleveland has sufficient authorized but unissued shares to carry out the proposed merger. How many new shares of stock will Cleveland have to issue to make the proposed merger? If the earnings for each firm remain unchanged, what will the post-merger earnings per share be? How much, effectively, has been earned on behalf of each of the original shares of Lewis stock? How much, effectively, has been earned on behalf of each of the original shares of Cleveland Corporation’s stock?

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Consider the following premerger information about Firm X and Firm Y: Firm X $ 40,000 20,000 Total earnings Shares outstanding Per-share values: Market Book $49 $ 20 Firm Y $15,000 20,000 Total asset of the combined company $18 $7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger? Total assets XY Total equity XY = $880,000 Total assets XY = Total equity XY = $760,000 Total assets XY = Total equity XY = $1,240,000 Total assets XY = Total equity XY = $853,600 Total assets XY = Total equity XY = $924,000 =

Answer 2

Question

Chapter 18, Problem 18.8P

a)

Summary Introduction

To determine: The number of share C Company has to issue to make the proposed 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 post-merger earnings per share.

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 determine: The earnings earned on the behalf of the original shares of L Company.

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Answer 3

Question

Chapter 18, Problem 18.8P

a)

Summary Introduction

To determine: The number of share C Company has to issue to make the proposed 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 post-merger earnings per share.

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 determine: The earnings earned on the behalf of the original shares of L Company.

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Answer 4

Question

Chapter 18, Problem 18.8P

a)

Summary Introduction

To determine: The number of share C Company has to issue to make the proposed 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 post-merger earnings per share.

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 determine: The earnings earned on the behalf of the original shares of L Company.

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Answer 5

Chapter 18, Problem 18.8P

a)

Summary Introduction

To determine: The number of share C Company has to issue to make the proposed 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 post-merger earnings per share.

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 determine: The earnings earned on the behalf of the original shares of L Company.

Answer 6

Chapter 18, Problem 18.8P

a)

Summary Introduction

To determine: The number of share C Company has to issue to make the proposed 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.

Answer 7

Chapter 18, Problem 18.8P

a)

Summary Introduction

To determine: The number of share C Company has to issue to make the proposed 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.

Answer 8

b)

Summary Introduction

To determine: The post-merger earnings per share.

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.

Answer 9

b)

Summary Introduction

To determine: The post-merger earnings per share.

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.

Answer 10

c)

Summary Introduction

To determine: The earnings earned on the behalf of the original shares of L Company.

Answer 11

c)

Summary Introduction

To determine: The earnings earned on the behalf of the original shares of L Company.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 18.1 - Prob. 18.1RQ Ch. 18.1 - Prob. 18.2RQ Ch. 18.1 - Prob. 18.3RQ Ch. 18.2 - Prob. 18.4RQ Ch. 18.2 - Prob. 18.5RQ Ch. 18.3 - Prob. 18.6RQ Ch. 18.3 - What is the ratio of exchange? Is it based on the...Ch. 18.3 - Prob. 18.8RQ Ch. 18.3 - Prob. 18.9RQ Ch. 18.3 - Prob. 18.10RQ

The number of share C Company has to issue to make the proposed 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.

Solution Summary: The author explains how C company acquires L Company by swapping 0.4 shares to each shares of L. The formula to calculate the EPS post-merger is the same.

Videos

To determine: The number of share C Company has to issue to make the proposed 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.

To determine: The post-merger earnings per share.

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.

To determine: The earnings earned on the behalf of the original shares of L Company.

Want to see the full answer?

Chapter 18 Solutions

The number of share C Company has to issue to make the proposed 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.

Solution Summary: The author explains how C company acquires L Company by swapping 0.4 shares to each shares of L. The formula to calculate the EPS post-merger is the same.

Videos

To determine: The number of share C Company has to issue to make the proposed 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.

To determine: The post-merger earnings per share. 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.

To determine: The earnings earned on the behalf of the original shares of L Company.

Want to see the full answer?

Chapter 18 Solutions

To determine: The number of share C Company has to issue to make the proposed 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.

To determine: The post-merger earnings per share.

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.