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 ...

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