User Account

All Pages

Prepare a report for the R B Patel board

Assignment Help Managerial Accounting
Reference no: EM133073711

Question - The CEO of R B Patel has made a proposal to its board to make a take-over offer of PBL Ltd. He is proposing to pay $3.15 per share. The current market share of PBL Ltd is $3.03. The CEO of R B Patel Ltd justifies the price offer, indicating that R B Patel is the largest customer of PBL Ltd, buying and retailing all the drinking water. It will be a natural addition to their business.  The CEO of R B Patel indicates that the water business will grow at 2% per year and hence dividends will also grow at this rate. PBL Ltd has a beta of 1.2 and 15-year government bonds yield 1.5%. The average market returns on the stock exchange where PBL Ltd trades is 3.5%. Refer to the PBL Ltd 2020 Financials provided.

Required - The board of R B Patel is not convinced with the offer price and seeks your advice. Prepare a report for the R B Patel board whether the offer price is justified. Your report should include three different approaches. Show all your calculations.

Reference no: EM133073711

Questions Cloud

Discuss experience animating text : What types of animations do you use in a presentation? Do animations add a visual punch to your presentation or distract your audience?
What is the effective annual interest rate : Car loans in some countries are priced on a fixed rate basis. For example, the prevailing 3-year car loan is 325%. What this rate means is that for a $10,000 lo
How much money did the firm borrow : Using a nominal rate of 4.8%, compounded semiannually, to discount the cash flows, how much money did the firm borrow?
Estimated required rate of return on woidtke stock : Woidtke Manufacturing's stock currently sells for $21 a share. The stock just paid a dividend of $2.40 a share (i.e., D0 = $2.40), and the dividend is expected
Prepare a report for the R B Patel board : Prepare a report for the R B Patel board whether the offer price is justified. Your report should include three different approaches
Calculate the npv of the project : CBC Inc. invests in a project that requires a machine of $39,000 and will generate annual taxable cash flow of $7,200 for 10years. The machine has a CCA rate of
Calculate the profitability index for projects : The Orange Corporation is trying to choose between the following two mutually exclusive on- line game projects. Assume the discount rate for the Orange Corporat
How much will he save in interest : About how much will he save in interest over the course of a year if he transfers his balance to a credit card with an APR of 19.1%, compounded monthly
Distinction important to doctoral level research : How is peer reviewed literature distinguished from other forms of literature? Why is this distinction important to doctoral level research?

Reviews

Write a Review

Managerial Accounting Questions & Answers

  What is the starting point for determining a business

What is the starting point for determining a business's net cash flow from its operating activities under the indirect method? Why is this figure used?

  What is the selling price of the goods

What is the selling price of the goods that a supplier is willing to sell at the equilibrium point, if the price of the item is X Kwachas

  Find the direct labor flexible-budget variance for November

Europa Company manufactures only one product. Total direct labor payroll 'For the period $439,200. Find the direct labor flexible-budget variance for November

  Compute the total manufacturing cost assigned to Job

During the year, Job P90 was started, completed and sold to the customer for $3,800. Compute the total manufacturing cost assigned to Job P90

  Find manufacturing cost budget and direct material purchase

Find the Manufacturing cost budget and Direct material purchase budget. Variable overhead costs Rs. 55 per direct labor hour. Fixed overhead costs Rs. 300,000

  What is the primary reason for the difference in net income

What is the primary reason for the difference in Net income between producing 500 shields and producing 1,000 shields, holding constant sales at 500 shields

  Make a schedule of cost of goods manufactured for june

Prepare a schedule of cost of goods manufactured for June. Atlas Company is a fairly new company that began its operations on June 1, 2020.

  Compute cost-volume-profit

How to Compute CVP (Cost-Volume-Profit) income statement for current operations and another after Mary's changes are introduced?

  Calculate the value of their equity

For each company, calculate the (1) value of their equity and (2) the total market value of the company. Are they in equilibrium

  What do think about joshwood slovakia

Joshwood Slovakia has recently joined Kerikeri Baggage Limited, a sister company of Queenstown Baggage. What do you think, and why?

  Determining firm cost of equity

Your firm has a debt-equity ratio of .40. Your cost of equity is 12% and your after-tax cost of debt is 6%. What will your cost of equity be if the target capital structure becomes a 50/50 mix of debt and equity?

  How to determine what is the contribution margin per unit

How to Determine What is the contribution margin per unit? Fred manufactures lamp shade the selling price of which is $80 per unit.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd