Companies A Ltd. & B Ltd. are set to merge. This merger is not likely to...
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Accounting
Companies A Ltd. & B Ltd. are set to merge. | |||
This merger is not likely to result in any gains. | |||
A Ltd., which is the Buyer is to issue Shares to the Shareholders of B Ltd., only to the extent of ensuring that the combined Earnings per share is Rs.3.2 | |||
| A Ltd. | B Ltd. | Merged Entity |
Market price per share Rs. | 17.5 | 12 | ? |
Number of Shares | 60000 | 110000 | ? |
Price Earnings Ratio | 7 | 5 | ? |
Total Earnings Rs. | ? | ? | ? |
Total Market Value Rs. | ? | ? | ? |
Earnings per share | 2.5 | 3 | 3.2 |
(Marks) | |||
A. Fill up all the Blanks in the above table | 10 | ||
B. What will be the cost of Acquistion for A Ltd .? | 2 | ||
C. How many New shares are to be exchanged for the Total shares in B Ltd.? | 2 | ||
D.Exchange Ratio? | 2 | ||
E. Calculate the Change in the Market Value of A Ltd. shares in comparison to their Market Value before merger | 4 | ||
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