a. If Castles acquires the other firm by exchanging one of its shares for every two of Firm
Foundations, what will be the earnings per share of the merged firm?
b. What should be the P/E of the new firm if the merger has no economic gains? What will happen to Castles' price per share? Show that shareholders of neither Castles nor Firm Foundation realize any change in wealth.
c. What will happen to Castles' price per share if the market does not realize that the P/E ratio of the merged firm ought to differ from Castles' premerger ratio?
d. How are the gains from the merger split between shareholders of the two firms if the market is fooled as in part (c)?
Recently Asked Questions
- Please i have a project to work on and i'll need help.. it requires me to do an adjusted trial balance and the financial statements for a merchandising company
- Hello I need some with these calculus problems. Thanks in advance!! find the linearization of the function F(x)= sqrt(x+8) at a=1 y=(x/3) +(8/3), y=(x/3)
- It usually takes less time to buy a six-pack of 7-Up , a loaf of bread , and a half-gallon of ice cream at a small convenience store such as a 7-Eleven than at