Question
In: Finance
P18–11 STEPS and postmerger price Data for Henry Company and Mayer Services are given in the following...
P18–11 STEPS and postmerger price Data for Henry Company and Mayer Services are given in the following table. Henry Company is considering merging with Mayer by swapping 1.25 shares of its stock for each share of Mayer stock. Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging.
| Item | Henry Company | Mayer Services |
| Earnings available for common stock | $225,000 | $50,000 |
| Number of shares of common stock outstanding | 90,000 | 15,000 |
| Market price per share | $45 | $50 |
-
Calculate the ratio of exchange in market price.
-
Calculate the earnings per share (EPS) and price/earnings (P/E) ratio for each company.
-
Calculate the price/earnings (P/E) ratio used to purchase Mayer Services.
-
Calculate the postmerger earnings per share (EPS) for Henry Company.
-
Calculate the expected market price per share of the merged firm. Discuss this result in light of your findings in part a.
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 1 year agoRelated Solutions
Data for Henry Company and Mayer Services are given in the following table, Item Henry Company...
Data for Henry Company and Mayer Services are
given in the following table,
Item
Henry Company
Mayer Services
Earnings available for common stock
$230,000
$100,000
Number of shares of common stock outstanding
110,000
10,000
Market price per share
$43
$200
Henry Company is considering merging with Mayer by swapping 1.19
shares of its stock for each share of Mayer stock. Henry Company
expects its stock to sell at the same price/earnings
(P/E) multiple after the merger as before merging.
a. ...
SHOW STEPS IN EXCEL PLEASE Consider the following data on price ($) and the overall score...
SHOW STEPS IN EXCEL PLEASE
Consider the following data on price ($) and the overall score
for six stereo headphones tested by a certain magazine. The overall
score is based on sound quality and effectiveness of ambient noise
reduction. Scores range from 0 (lowest) to 100 (highest).
Brand
Price ($)
Score
A
180
76
B
150
71
C
95
61
D
70
58
E
70
40
F
35
24
(a)
The estimated regression equation for this data is
ŷ =...
A digital camera manufacturing company has the cost data given in the following table: Sales price...
A digital camera
manufacturing company has the cost data given in the following
table:
Sales price
$783
Units sold
29,669
Direct labor
$1,503,075
Materials
$6,348,961
Overhead
$2,614,707
Total operating expense
$2,740,386
% Profit
Calculate the
percentage profit
The following data apply to the provision of psychological testing services: Sales price per unit...
The following data apply to the provision of psychological
testing services:
Sales price per unit (1 unit = 1 test plus feedback to
client)$300
Fixed costs (per month):
Selling and administration 20,000
Production overhead (e.g., rent of testing facilities)
17,500
Variable costs (per test):
Labor for oversight and feedback 165
Outsourced test analysis 17
Materials used in testing 7
Production overhead 12
Selling and administration (e.g., scheduling and billing) 14
Number of tests per month 2,000tests
Required:
Calculate the...
P18-3 (Allocate Transaction Price, Discounts, Time Value) Grill Master Company sells total outdoor grilling solutions, providing...
P18-3 (Allocate Transaction Price, Discounts, Time Value) Grill
Master Company sells total outdoor grilling solutions, providing
gas and charcoal grills, accessories, and installation services for
custom patio grilling stations.
Respond to the requirements related to the following independent
revenue arrangements for Grill Master
products and services.
(a) Grill Master offers contract GM205, which is comprised of a
free-standing gas grill for small patio use plus installation to a
customer’s gas line for a total price $800. On a standalone basis,...
Item 11 Item 11 Nu Company reported the following pretax data for its first year of...
Item 11
Item 11
Nu Company reported
the following pretax data for its first year of
operations.
Net sales
2,960
Cost of goods
available for sale
2,360
Operating
expenses
800
Effective tax
rate
40
%
Ending
inventories:
If LIFO is
elected
960
If FIFO is
elected
1,140
What is Nu's gross profit ratio if it elects LIFO?-----
---------------------------------------------------------------------------------------------------------------------------------------------------
Item 12
Item 12
Udon Inc. adopted
dollar-value LIFO (DVL) as of January 1, 2018, when it had an
inventory of $710,000....
The following data apply to the provision of psychological testing services: Sales price per unit (1...
The following data apply to the provision of psychological
testing services:
Sales price per unit (1 unit = 1 test plus feedback to
client)
$
320
Fixed costs (per month):
Selling and administration
16,000
Production overhead (e.g., rent of testing facilities)
20,000
Variable costs (per test):
Labor for oversight and feedback
160
Outsourced test analysis
19
Materials used in testing
6
Production overhead
15
Selling and administration (e.g., scheduling and billing)
16
Number of tests per month
2,000
tests
Required:...
The following data apply to the provision of psychological testing services: Sales price per unit (1...
The following data apply to the provision of psychological
testing services:
Sales price per unit (1 unit = 1 test plus feedback to
client)
$
330
Fixed costs (per month):
Selling and administration
20,000
Production overhead (e.g., rent of testing facilities)
20,000
Variable costs (per test):
Labor for oversight and feedback
170
Outsourced test analysis
21
Materials used in testing
5
Production overhead
15
Selling and administration (e.g., scheduling and billing)
17
Number of tests per month
2,000
tests
Required:...
The following data apply to the provision of psychological testing services: Sales price per unit (1...
The following data apply to the provision of psychological
testing services:
Sales price per unit (1 unit = 1
test plus feedback to client)
$
320
Fixed costs (per month):
Selling and administration
18,000
Production overhead (e.g., rent
of testing facilities)
22,500
Variable costs (per test):
Labor for oversight and
feedback
165
Outsourced test analysis
19
Materials used in testing
7
Production overhead
9
Selling and administration
(e.g., scheduling and billing)
14
Number of tests per month
2,000
tests
Required:...
The following data apply to the provision of psychological testing services: Sales price per unit (1...
The following data apply to the provision of psychological testing
services:
Sales price
per unit (1 unit = 1 test plus feedback to client)
$
340
Fixed costs
(per month):
Selling and
administration
16,000
Production
overhead (e.g., rent of testing facilities)
25,000
Variable costs
(per test):
Labor for
oversight and feedback
145
Outsourced
test analysis
15
Materials used
in testing
6
Production
overhead
11
Selling and
administration (e.g., scheduling and billing)
20
Number of
tests per month
2,000
tests
Required:...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1) The 3rd bright fringe of a double slit interference pattern is 30.0 cm above the...
- A solar cell generates a potential difference of 0.320 V when a 445.0 ? resistor is...
- A ceiling fan consists of a small cylindrical disk with 5 thin rods coming from the...
- You measure the following quantities as A = 1.0 m ± 0.2 m, B = 2.0...
- Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for...
- When the electricity goes out on your campus, a backup source powers the servers that handle...
- I am having trouble with my assignment and getting compile errors on the following code. The...
ADVERTISEMENT