User Account

All Pages

What is the price of targetco

Assignment Help Finance Basics
Reference no: EM132953073

Your company has earnings per share of $3. It has 1 million shares? outstanding, each of which has a price of $45. You are thinking of buying? TargetCo, which has earnings of $2 per? share, 1 million shares? outstanding, and a price per share of $24. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offered an exchange ratio such? that, at current? pre-announcement share prices for both? firms, the offer represents a 21% premium to buy TargetCo. ? However, the actual premium that your company will pay for TargetCo when it completes the transaction will not be 21%?, because on the announcement the target price will go up and your price will go down to reflect the fact that you are willing to pay a premium for TargetCo without any synergies. Assume that the takeover will occur with certainty and all market participants know this on the announcement of the takeover? (ignore time value of? money).

a. What is the price per share of the combined corporation immediately after the merger is? completed?

b. What is the price of your company immediately after the? announcement?

c. What is the price of TargetCo immediately after the? announcement?

d. What is the actual premium your company will? pay?

Reference no: EM132953073

Questions Cloud

Find average customer payment : Sussex Inc., a large fertilizer distributor based in Nova Scotia, is planning to use a lockbox system to speed up collections from its customers located on the
Calculating a company wacc : When calculating a company's WACC, should book value, market value, or target weights be used? Explain.
Compute gross profit : HASF continued its operations results follows - Variable selling and administrative exp 10 per unit. Compute gross profit if we use Marginal costing
What is yield to call on bond : Brandi owns a 5% coupon rate callable bond that can be called in 8 years with a 3% call premium. What is her yield to call on this bond, assuming she just paid
What is the price of targetco : Your company has earnings per share of $3. It has 1 million shares? outstanding, each of which has a price of $45. You are thinking of buying? TargetCo, which h
Determine a liquidity premium of percentage points : A relatively small medical group practice is trying to estimate its CCC. The practice is 100 percent equity financed. The rate of return on 20-year Treasury bon
Compute the hedge using a forward rate agreement : To protect against interest rate changes when rolling over the loan in 6 months, the bank decides to hedge using a forward rate agreement (FRA).
Calculate the three-month libor : ABC International has borrowed $4,000,000 at LIBOR plus a lending margin of .65 percent per annum on
Evaluating investment opportunities : Mark is using the modified internal rate of return (MIRR) when evaluating investment opportunities. He is able to reinvest cash flows received from the investme

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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