Ch01_SSol

Ch01_SSol - Problem 1.1 Shareholder returns If a share...

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Problem 1.1 Shareholder returns Assumptions Value Share price, P1 \$16.00 Share price, P2 \$18.00 Dividend paid, D2 \$- a. If the company paid no dividend (plugging zero in for the dividend): Return = (P2 - P1 + D2) / (P1) 12.500% b. And if the company paid a \$1 dividend: Assumptions Value Share price, P1 \$16.00 Share price, P2 \$18.00 Dividend paid, D2 \$1.00 Total shareholder return, including dividends, is: 18.750% Return = (P2 - P1 + D2) / (P1) If a share price rises from \$16.00 to \$18.00 over a one year period, what was the rate of return to the shareholder if:

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Problem 1.6 Price/Earnings Ratios and Acquisitions Market Total Number value Market Company P/E ratio of shares per share Earnings EPS Value Pharm-Italy 20 10,000,000 \$20.00 \$10,000,000 \$1.00 \$200,000,000 Pharm-USA 40 10,000,000 \$40.00 \$10,000,000 \$1.00 \$400,000,000 Rate of exchange: Pharm-USA shares per Pharm-Italy share: 5,500,000 a. How many shares would Pharm-USA have outstanding after the acquisition of Pharm-Italy? 10,000,000 + 5,500,000
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This note was uploaded on 07/27/2011 for the course ECON 101 taught by Professor Dr. during the Spring '11 term at Columbia Union.

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Ch01_SSol - Problem 1.1 Shareholder returns If a share...

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