O'Reilly logo

Fundamentals of Financial Management, Third Edition by Vyuptakesh Sharan

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

SOLVED NUMERICAL PROBLEMS
  1. Company A with 10 lakh outstanding shares of Rs 40 each acquires Company B which has 5 lakh outstanding shares of Rs 20 each. The latter will be ready for acquisition only when it gains at least Rs 25 lakh from this move. Find how much Company A should pay per share to Company B.

    Solution

    Payment per share = (Share value of target company + gain)/No. of shares

                                  = (5,00,000 shares × Rs 20 + Rs 25,00,000)/5,00,000 shares

                                  = Rs 25 per share

     

  2. Company A with 10 lakh outstanding shares of Rs 40 each acquires Company B which has 5 lakh outstanding shares of Rs 20 each. Their P/E ratio is 10 and 8 respectively. Find the price-earning ratio of the merged firm if Company ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required