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Assume the following financial data for Noble Corporation and Barnes Enterprises:NOBLE BARNESCORPORATION CORPORATIONTotal earnings.......................... $1,200,000 $3,600,000Number of shares of stock outstanding... 100,000 2,400,000Earnings per share...................... $2.00 $1.50Price-earnings ratio (P/E).............. 24X 32XMarket price per share.................. $48 $48
(a) If all the shares of Noble Corporation are exchanged for those of Barnes Enterprises on a share-for-share basis, what will postmerger earnings per share be for Barnes Enterprises? Use an approach similar to that in Table 20-3 on page 619. (ref:Finance Management course 661, chapters 19 through 21, Lesson 28).(b) Explain why the earnings per share of Barnes Enterprises changed.(c)Can we necessarily assume that Barnes Enterprises is better off after the merger?
Investigate the approach that Cisco Systems has used in its many successful acquisitions. What are some of the human resource practices that have made its acquisitions successful?
The stock of United Industries has a beta a 1.26 and an expected return of 11.4. The risk-free rate of return is 4 percent. What is the expected return on the market? HINT: Use the Security Market Line.
Assuming that interest rates in the economy are expected to remain at their current level, what is the best estimate of the nominal interest rate on new bonds? Round your answer to two decimal places.
The Wall Street Journal reports that the rate on two year Treasury securities is 2.10% and the rate on four year Treasury securities is 3.05%.
Ignoring income taxes, how much is the net present value of the proposed investment?
Rangoon Corporation sales last year were $400,000 and its year-end total assets were $300,000. The average Company in the industry has a total assets turnover of 2.5.
Computation of IRR as well as net present value and Look at the graph you draw and write a short paragraph stating what the graph
Calculate the degree of operating leverage, degree of financial leverage, and degree of total leverage for Van Auken Lumber and interpret the meaning of each of numerical values.
Compute the effective cost of not taking the cash discount under the following trade credit terms.
Examine the structure and activities in Wal-Mart and identify two projects or events which required an investment. One should be the 'current project' and other long-term investment project.
Better Life Nursing Home, Inc. has maintained dividend payment of $4 per share for many years. The same dollar dividend is expected to be paid in future years. Determine the value of company's stock.
The firm's marginal tax rate is 34 percent and its required rate of return is 12%. What is the net incremental tax cash flow?
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