Solve maximum exchange ratio that large ltd

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Small Ltd. is being acquired by Large ltd. on a share exchange basis. Their selected data are as follows:

Large Ltd.

PAT (in Lacs) 56

No. of shares (in Lacs) 10

EPS 5.6

P/E ratio 12.5

Small Ltd.

PAT (in Lacs) 21

No. of shares (in Lacs) 8.4

EPS 2.5

P/E ratio 7.5

Problem 1: Calculate

(i) Market Value per share (pre merger)

(ii) Maximum exchange ratio that Large Ltd. Should offer without the dilution of (a) EPS and (b) MPS

Reference no: EM132618597

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