Reference no: EM131122509
The McPherson Company is considering acquiring the McAlester Company. Selected financial data for the two companies are shown here:
![1677_f.jpg](https://secure.expertsmind.com/CMSImages/1677_f.jpg)
Both companies have 40 percent marginal tax rates. Assume that no synergistic benefits are expected.
a. Calculate the McPherson Company's postmerger earnings per share if the McAlester stockholders accept an offer of $20 a share in a stock-for-stock exchange. (The expression stock-for-stock exchange means that the common stock of one company is exchanged for the common stock of another company.)
b. Recalculate part a, assuming that the McPherson common stock price is $42 a share. (All other figures remain constant.)
c. Calculate McPherson's earnings per share if the McAlester stockholders accept one $6 convertible preferred share (stated value, $100) for each five shares of McAlester stock held.
d. Calculate McPherson's earnings per share if each group of 50 shares of McAlester stock is exchanged for one 8 percent, $1,000 debenture.
e. Compare the premerger expected dividend return on the McAlester stock with the expected postmerger dividends or interest available with the exchanges described in parts a, c, and d. (Undoubtedly, at the time of acquisition, McPherson would have pointed out these expected increases in yield to the McAlester stockholders.) Assume that an investor initially holds 100 shares of McAlester stock.
f. What can be said about comparing the expected total postmerger return (dividends plus price appreciation) on the McAlester stock versus the expected total postmerger return on the McPhersonsecurities?
Show that there exists at least one node j
: Show that there exists at least one node j such that the sequence of labels dj generated by the algorithm diverge to -∞. Hint: Argue that if the limits dj of all the label nodes are finite, then we have dj ≤ di + aij for all arcs (i, j).
|
Compare results of three methods by quality of information
: Compare the results of the three methods by quality of information for decision making. Using what you have learned about the three methods, identify the best project by the criteria of long term increase in value.
|
People often confuse the varying sources and types of laws
: People often confuse the varying sources and types of laws. There are laws, statutes, and administrative regulations that often drive healthcare policies. Please discuss the differences between these sources of law and provide an example of a healthc..
|
During the current year merchandise is sold
: During the current year, merchandise is sold for $375,000 cash and $815,000 on account. The cost of the merchandise sold is $700,000. What is the amount of the gross profit?
|
Calculate the mcpherson company postmerger earnings
: Calculate the McPherson Company's postmerger earnings per share if the McAlester stockholders accept an offer of $20 a share in a stock-for-stock exchange
|
Describe the different types of attraction
: Describe at least two unique rites of passage to adulthood on the basis of ethnic or cultural variations. Explain the concepts of pluralism and assimilation and describe how they affect the rites of passage of individuals.
|
Show that it terminates in a number of iterations
: Construct a related example for which the number of iterations of the forward/reverse algorithm is not polynomially bounded.
|
Other things held constant in a competitive labor market
: Other things held constant in a competitive labor market, if workers negotiate a contract in which the employer agrees to pay an hourly wage of $17.85 while the market equilibrium hour rate is $16.50, the: a)
|
American cultural and social tensions of the time
: Write an essay of 500 to 750 words (with a typical font and spacing this will be between 2 and 3 pages) on the following topic: Choose one or more films that you have viewed in a screening for this course or in your personal viewing. Discuss the i..
|