Calculate the number of shares to be issued by Intous Ltd

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Reference no: EM133161106

Question - World Enterprises is determined to acquire Intous Ltd through exchanging stocks. World Enterprises is offering R65 per share for Intous ltd. You are given the following information

 

World Enterprises

Intous Ltd

Net Income

R50

R10

Shares outstanding

5000

2000

Earnings per share

R10

R5

Market price per share

R150


Price earnings ratio

R15


Required -

a. Calculate the number of shares to be issued by Intous Ltd.

b. Calculate combined earnings per share of both World Enterprise and Intous Ltd.

c. Calculate price earnings ratio (P/E ratio) paid (Hint: use the R65 to calculate the P/E ratio).

d. Compare the current and paid P / E ratios.

Reference no: EM133161106

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