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What is the cost of the cash offer

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Reference no: EM133161117

Question - Procta Ltd is determined to report earnings per share of R9.5. It therefore acquires JJ&J Company. You are given the following facts

 

Proctas Ltd

JJ&J

Merged firm

Earnings per share

R6.50

R8

R9.50

Price per share

R36

R21

?

Price-earnings ratio

18

7

?

Number of shares

50000

60000

?

Total earnings

R325,000

R480,000

?

Total market value

R5,850,000

R3,360,000

?

Once again 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 R2.67 earnings per share objective.

Required -

a. Complete the above table for the merged firm.

c. What is the cost of the cash offer if proctas ltd paid R2500000 for JJ&J?

Reference no: EM133161117

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