roblem 2: Value of Control: Intrinsic Valuation Acquirer Corporation would like to purchase the equity of Target Corporation. Target Corporation has the following financial information and forecasts: Current Management After Acquisition Number of shares outstanding 24,000 24,000 Dividends last year 25.00 - Dividends, year‐end 26.40 Growth rate 0.04 0.04 Required rate of return 0.16 0.15 Required: 1. Total value of the shares under current management

roblem 2: Value of Control: Intrinsic Valuation Acquirer Corporation would like to purchase the equity of Target Corporation. Target Corporation has the following financial information and forecasts: Current Management After Acquisition Number of shares outstanding 24,000 24,000 Dividends last year 25.00 - Dividends, year‐end 26.40 Growth rate 0.04 0.04 Required rate of return 0.16 0.15 Required: 1. Total value of the shares under current management

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 1FIC

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1. The cost method of accounting for stock investments is used when the company acquires a. Greater than 50% of the company's stock b. Between 20% to 50% of the company's stock c. Less than 20% of the company's stock 2. The significance of percentage of ownership relates to how much _____________ the acquiring company has in the new company. a. data b. control c. confidence
4. An entity showed the following data:Share capital, par value P50 5,000,000Share premium 200,000Retained Earnings 2,000,000Market value of share on declaration date 75Market value of share on distribution date 85Treat each item independently: a. If the entity would declare a 1 for 5 share dividend, what amount would be charged to retained earnings? b. What amount will be credited to share premium if the entity would declare 15% share dividend?
4. An entity showed the following data:Share capital, par value P50 5,000,000Share premium 200,000Retained Earnings 2,000,000Market value of share on declaration date 75Market value of share on distribution date 85Treat each item independently: c. How much would be the total shareholders’ equity after a 10% share dividend declaration? d. If the entity would declare a 1 for 5 share split, What would be the balance of retained earnings?
4. An entity showed the following data:Share capital, par value P50 5,000,000Share premium 200,000Retained Earnings 2,000,000Market value of share on declaration date 75Market value of share on distribution date 85Treat each item independently: e. If the entity would declare a 2 for 1 share split, How much would be the new par value?
2. An entity showed the following data:Share capital, par value P10, 25,000 shares issued 250,000Share Premium 50,000Retained Earnings 150,000Market value of share on declaration date 20Market value of share on distribution date 40a. If a 10% share dividend will be declared, what amount of retained earnings will be capitalized? Prepare the entries on declaration and distribution date.b. If a 25% share dividend will be declared, what amount will be charged to retained earnings? Prepare the entries on declaration and distribution date
Question 2 Calculate the fully diluted shares outstanding for the following potential target company. The target company's shares are trading in the market at $8.00. The potential acquirer has modelled that they are willing to pay $13.50 per share in an acquisition. The target company has basic shares outstanding of 100 million. The target company has employee share options outstanding, as outlined in Figure 1. Stock Options Outstanding Stock Options Exercisable Options Tranches 1 2 8656 AWN 3 4 7 Number Outstanding in millions 8 12 9 87 43 23 16 68 266 Weighted Average Exercise Price/Share 8.5 9.2 11.4 13.1 16.4 18.9 20.2 25.7 Number Outstanding in millions 2 4 7 71 36 15 14 47 196 Weighted Average Exercise Price/Share 8.6 9.1 11.9 12.4 16.55 18.61 20.6 25.4 Figure 1 The target also has convertible bonds, with the following note in its most recent financial statements: "the Company has outstanding $200 million of 5.25% convertible notes which are included in Long-term debt due within…
ed A company has the following balance sheet (market values): Liabilities + Equity Debt Equity Assets Cash Operating Assets 600 1000 400 1200 If the firm has 300, find its fair share price after it repurchases 100 worth of shares: (round your answer to the nearest 0.01)
: let's assume Company XYZ has the following characteristics: Shares Outstanding: 1,000,000Current Share Price: $5Total Debt: $1,000,000Total Cash: $500,000 Based on the formula above, we can calculate Company XYZ's enterprise value is?
Calculate the total cost, proceeds, and gain (or loss) (in $) for the stock market transaction. Commissions Number Purchase Selling Total Gain Company of Proceeds Price Price Odd Cost (or Loss) Shares Buy Sell Lot an oil 100 $48.20 $54.06 3% 3% $ $ company
Calculate the total cost, proceeds, and gain (or loss) (in $) for the stock market transaction. Commissions Number Purchase Total Selling Price Gain Company of Proceeds Price Odd Cost (or Loss) Shares Buy Sell Lot an oil 100 $46.20 $53.06 3% 3% 2$ company
- What is the unrealized gain (loss) reported in profit or loss for the year 2021?A. P31,000B. (P31,000)C. P43,000D. (P43,000) - How much was the gain or loss on the sale of CD shares? A. P1,100 gain B. P2,000 gain C. P15,000 loss D. P15,900 loss
Calculate the total cost, proceeds, and gain (or loss) (in $) for the stock market transaction. Commissions Number of Selling Purchase Price Total Gain Company Proceeds Shares Price (or Loss) Cost Buy Sell Odd Lot an oil company 100 $45.20 $55.06 3% 3%

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bartleby, a Learneo, Inc. business

	Current Management	After Acquisition
Number of shares outstanding	24,000	24,000
Dividends last year	25.00	-
Dividends, year‐end		26.40
Growth rate	0.04	0.04
Required rate of return	0.16	0.15