Question
In: Finance
World Enterprises is determined to report earnings per share of $3.20. It therefore acquires the Wheelrim...
World Enterprises is determined to report earnings per share of $3.20. It therefore acquires the Wheelrim and Axle Company. There are no gains from merging. In exchange for Wheelrim and Axle shares, World Enterprises issues just enough of its own shares to ensure its $3.20 earnings per share objective.
a. Complete the table below for the merged firm. (Do not round intermediate calculations. Round "Price per share" and "Price-earnings ratio" to 2 decimal places and other answers to the nearest whole number.)
| World Enterprises | Wheelrim and Axle | Merged Firm | |
| Earnings per share | $2.00 | $3.00 | $3.20 |
| Price per share | $30 | $15 | |
| Price-earnings ratio | 15 | 5 | |
| Number of shares | 180,000 | 280,000 | |
| Total earnings | $360,000 | $840,000 | |
| Total market value | $5,400,000 | $4,200,000 |
b. How many shares of World Enterprises are exchanged for each share of Wheelrim and Axle?
Shares exchanged?
c. What is the cost of the merger to World Enterprises?
Merger Cost?
d. What is the change in the total value of the World Enterprises shares that were outstanding before the merger?
|
Solutions
jeff jeffy answered 9 months agoRelated Solutions
World Enterprises is determined to report earnings per share of $2.67. It therefore acquires the Wheelrim...
World Enterprises is determined to report earnings per share of
$2.67. It therefore acquires the Wheelrim and Axle Company. There
are no gains from merging. In exchange for Wheelrim and Axle
shares, World Enterprises issues just enough of its own shares to
ensure its $2.67 earnings per share objective.
World Enterprises
Wheelrim and Axle
Merged Firm
Earnings per share
$2.00
$2.50
$2.67
Price per share
$40
$25
$34.43
Price-earnings ratio
20
10
12.86
Number of shares
100,000
200,000
262,172
Total...
World Enterprises is determined to report earnings per share of $2.67, and therefore acquires the Wheelrim...
World Enterprises is determined to report earnings per share of
$2.67, and therefore acquires the Wheelrim and Axle Company. You
are given the following facts: World Enterprises Wheelrim and Axle
Merged Firm Earnings per share $2.00 $2.50 $2.67 Price per share
$40 $25 ? Price-earnings ratio 20 10 ? Number of shares 100,000
200,000 ? Total earnings $200,000 $500,000 ? Total market value
$4,000,000 $5,000,000 ? There are no gains from merging. In
exchange for Wheelrim and Axle shares, World...
World Enterprises is determined to report earnings per share of $2.67. It therefore acquires the Wheelrim...
World Enterprises is determined to report earnings per share of
$2.67. It therefore acquires the Wheelrim and Axle Company. You are
given the following facts:
World
Enterprises
Wheelrim
and Axle
Merged Firm
Earnings per share
$
2.00
$
2.50
$2.67
Price per share
$
40
$
25
?
Price–earnings ratio
20
10
?
Number of shares
100,000
200,000
?
Total earnings
$
200,000
$
500,000
?
Total market value
$
4,000,000
$
5,000,000
?
There are no gains from merging....
World Enterprises is determined to report earnings per share of $2.80. It therefore acquires the Wheelrim...
World
Enterprises is
determined to report earnings per share of $2.80. It therefore
acquires the Wheelrim and Axle Company. There are no gains from
merging. In exchange for Wheelrim and Axle shares, World
Enterprises issues just enough of its own shares to ensure its
$2.80 earnings per share objective.
a. Complete the table below for the merged firm.
(Do not round intermediate calculations. Round "Price per
share" and "Price-earnings ratio" to 2 decimal places and other
answers to the nearest...
Orion plc is determined to report earnings per share of 267p. It therefore acquires Mintaka plc....
Orion plc is determined to report earnings per share of 267p. It
therefore acquires Mintaka plc. There are no gains associated with
the acquisition. In exchange for Mintaka’s shares, Orion issues
just enough of its own shares to ensure its 267p earnings per share
objective.
Please find the following information:
Orion
Mintaka
Earnings per Share
£2.00
£2.50
Price per Share
£40
£25
Price-Earnings Ratio
20
10
Number of Shares
100,000
200,000
Earnings
£200,000
£500,000
Market Value
£4,000,000
£5,000,000...
Orion plc is determined to report earnings per share of 267p. It therefore acquires Mintaka plc....
Orion plc is determined to report earnings per share of 267p. It
therefore acquires
Mintaka plc. There are no gains associated with the acquisition. In
exchange for
Mintaka’s shares, Orion issues just enough of its own shares to
ensure its 267p
earnings per share objective.
Please find the following information:
OrionMintaka
Earnings per Share£2.00
£2.50
Price per Share
£40
£25
Price-Earnings Ratio20
10
Number of Shares100,000200,000
Earnings
£200,000£500,000
Market Value
£4,000,000£5,000,000
Required:
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Bean's equity cost of capital is 10%,...
1. You expect that Bean Enterprises will have earnings per share of $2 for the coming...
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The SEC requires that firms report both basic and diluted earnings per share in their 10-K...
The SEC requires that firms report both basic and diluted
earnings per share in their 10-K reports. Why do firms’ basic EPS
and diluted EPS differ? Which EPS number is more informative to you
as an investor?
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