What is the value of the publiciste company for gazetier

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Questions: The company Gazetier is considering making a purchase offer to the company Publiciste. Its chief financial officer gathered the following information: Journalist Publicist Price-earnings ratio 23 16 Shares outstanding 2,000,000 600,000 Profits $4,000,000 $960,000
Gazetier management is also aware that financial analysts expect earnings and dividends from Publiciste (currently $1.75 per share) increase at a constant rate of 3% each year. She believes that acquiring the Publiciste company will allow its company to achieve economies of scale that
will increase this growth rate to 5% per year.

a) What is the value of the Publiciste company for Gazetier?

b) What would Gazetier gain from this acquisition?

c) If Gazetier offered $30 in cash for each Publiciste share, what would be the NPV of the acquisition?

d) What is the highest amount that Gazetier should agree to pay in cash for each action of Publicist?

e) If Gazetier offered 250,000 of its shares in exchange for the outstanding shares of Publicist, what would be the NPV of this transaction?

Reference no: EM133331565

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