1.1 How much will the shareholders of Surrey Ltd gain or lose on a per share basis. 1.2 Determine the purchase price of Surrey Ltd that is implied by the 1.25 exchange ratio. 1.3 Calculate the net present value of the proposed acquisition. 1.4 Calculate the proposed acquisition premium. 1.5 Compute the earnings per share for Watford Refiners before and after the proposed acquisition.
Q: Calculate net pay in the following example.
A: Given in the question: FICA Rate 7.65% FITW Rate 15% Paid Per week $475
Q: An equipment has a purchase price (P) of $100,000 with a salvage value (S) of $20,000 and useful…
A: We will use the concept of time value of money here. Using the concept of time value of money, we…
Q: Peking Palace reported the following: Standard hours per unit 1.5 hrs. Standard rate per hour…
A: The question is based on the concept of Cost Accounting. Direct labor time variance is calculated by…
Q: Describe the primary characteristics for governmental and not-for-profit entities. How does this…
A: Governments with general purposes offer a wide range of services. Typically, only one or a small…
Q: Cox Electric makes electronic components and has estimated the following for a new design of one of…
A: Answer:- Profit model:- A profit model will take into account all expenses and income related to a…
Q: An accountant for a corporation forgot to pay the firm's income tax of $725,718.89 on time. The…
A: Income tax is amount of liability that is to be paid to the government or the appropriate tax…
Q: Giblin’s Goodies pays employees weekly on Fridays. However, the company notices that March 31 is a…
A: Journal entry is a process of recording the business transaction into books of accounts initially.…
Q: The role of an internal audit is to provide independent assurance that an organisation's risk…
A: Internal audits are performed to evaluate a company's internal controls, which include its…
Q: Karim Enterprises has two hourly employees, Kala and Carl. Both employees earn overtime at the rate…
A: Gross salary is the amount of pay that an employee receives before any taxes are withheld from it.…
Q: Englert Hospital began using standards to evaluate its Admissions Department. The standard was…
A: The question is based on the concept of Cost Accounting.
Q: Eles. Its December income statement follows. Sales Cost of goods sold Gross profit MERLINE…
A: The budgeted income statement is often based on the actual results of prior periods, adjusted for…
Q: ways use the same checking account for business transactions and for the owner's personal…
A: Checking accounts refers to the form of a highly liquid form of transactional bank account that…
Q: Question 7 Kay Company budgets overhead cost of $3,738,000 for the next year. The company uses…
A: The traditional method of overhead allocation is based on a predetermined overhead rate. The…
Q: A business with a periodic system to calculate its inventory, has provided the following…
A: FOB Destination The shipping abbreviation FOB (Freight on Board) Destination denotes that until the…
Q: The product of a company passes through three processes to completion. They are known as A, B, and…
A: Process costing is a method of costing used mainly in manufacturing where units are continuously…
Q: LO.5 Cindy maintains an office in her home that comprises 8% (200 square feet) of total floor space.…
A: calculation of Cindy's office in the home deduction under regular method and simplified method are…
Q: A company requires two materials ‘X’ and ‘Y’ for executing a new order. The order requires 2000units…
A:
Q: Joetz Corporation has gathered the following data on a proposed investment project (Ignore income…
A: The incremental net income anticipated from a potential investment opportunity, divided by the…
Q: LO.3 On Thursday, Justin flies from Baltimore (where the office for his sole proprietorship is…
A: Explanation all requirement of above are as follows
Q: The asymmetric information problems that act as a barrier to efficient allocation of capital is…
A: Introduction: Dynamics of financial crisis: The explanation of financial crisis are as follows…
Q: Richard has been a highly regarded employee of the Brier Corporation for almost 20 years. Her…
A: Internal controls are the rules, regulations and processes to ensure integrity of financial and…
Q: Room 1 has 50,000 square feet of rentable space. Room 2 account for 30,000 square feet and lobby…
A: The amount which is allocated to the lobby is computed by deducting the cost from the sales made and…
Q: please can i see the working and how you arrived at the answer
A: I'm solving it manually so that you can understand how it is done. a. In the first part, it is…
Q: What are the criteria for classifying a lease as operating or capital? Why is there a difference…
A: Criteria for classifying a lease as operating or capital: There are five different types of leasing…
Q: Ese Corporation has the following seles mix for its ever products A, 20% 30% and C. 50% Fed costs…
A: When a company sells more than one product it uses sales mix method to know proportion of different…
Q: Sturdy Manufacturing Co. assembled the following cost data for job order #23: OA. $194,500 O B.…
A: Working :- 1) Calculation of manufacturing overhead applied :- Indirect manufacturing labor +…
Q: Kesterson Corporation has provided the following information: Cost per Unit Cost per Period…
A: Lets understand the basics. Overhead is total of indirect costs. In other words all indirect…
Q: The following is a list of accounts and adjusted amounts for Rollcom, Incorporated, for the fiscal…
A: Trial Balance contains all those ledger balances which have a closing balance on a particular date.…
Q: Discuss whether the dividend growth model or the capital asset pricing model should be used to…
A: The dividend growth model and the capital asset pricing model are both methods that can be used to…
Q: What account should be debited and what account should be credited and for how much? You can first…
A: Debits and credits are commonly assessed in accounts ledgers in double-entry accounting to reflect…
Q: Companies are financed in two ways, either with equity or debt financing.’ Considering the above…
A: Debt financing is the act of raising funds by selling bonds, taking out loans, or other forms of…
Q: 1. Capital structure is important as it helps maintains a proper and adequate level of capital,…
A: Capital Structure refers to a specific combination of debt and equity used by a company for…
Q: On July 1, 2022, Nate, a cash basis taxpayer, paid $1,200 of car insurance premiums for a 12 month…
A: The tax ramifications of a return of your insurance premiums depend on how you paid for the policy.…
Q: The following information is regarding the first process for the month of November. a. All…
A: The total cost of producing a product, including raw materials and operating costs, is detailed in a…
Q: Socks Unlimited produces sports socks. The company has fixed expenses of $85,000 and variable…
A: CONTRIBUTION MARGIN Contribution margin per unit is computed by deducting Total Variable Cost per…
Q: Elizabeth Sales decided to create a branch in Naga City at the start of 20XX. The branch operation…
A: Journal entries is the transactions, which helps us to keeping or making records of transactions of…
Q: LO 5 Exercise 9-10A Calculating payroll Mega Mart has two employees in 2010. Marsha earns $4,200 per…
A:
Q: IFRS requires annual reviews of long-lived assets (other than goodwill) for reversal indicators. A…
A: Accounting for Impairments From a GAAP perspective, the asset is recorded at its historical cost,…
Q: Minnesota Office Products (MOP) produces three different paper products at its Vaasa lumber plant:…
A: Manufacturing cost per unit means the cost incurred on the making of each unit of the product. It…
Q: a) Brittany purchased a building for $160,000 on January 1, 2013. The purchase price does not…
A: Note: “Since you have asked multiple questions, we will solve the first question for you. If you…
Q: machine costing $210,200 with a four-year life and an estimated $19,000 salvage value is installed…
A: Depreciation per unit as per units of production method = (Total cost - salvage value)/Estimated…
Q: December 7 Issued credit memo CM202 to Marshal Motors (10900) for $900 worth of merchandise…
A: Journal Entry :— It is an act of recording transaction in books of account when transaction…
Q: A furniture company reports these data: Price per unit: $30 Variable cost per unit: $15 Fixed…
A: Break Even Point (BEP) :— It is the point at which total cost is equal to total revenue. At this…
Q: Bluegill Company sells 15,500 units at $220 per unit. Fixed costs are $170,500, and operating income…
A: Total sales revenue - Variable cost = Contribution margin And Contribution margin - Fixed cost =…
Q: Elitz and Van Aken, CPAs, offer three types of services to clients: auditing, tax, and small…
A: BUDGETING A Budget is an estimation of revenue & Expenses over a Specific Period of Time for…
Q: Jackson Enterprises manufactures two products-a basic gizmo and an advanced model gizmo. The company…
A: ACTIVITY BASED COSTING Activity based costing is one of the powerful tool for measuring…
Q: Mr. Zheng purchased a residential flat in Hong Kong with a mortgage loan obtained from a local bank.…
A: In General Property Rent is Get Benefit of 20% And The Expense Related to this Will Get Benefit if…
Q: eceiving Number setup pection Inspection time For the basic model is 250 units, for the adva of…
A: Overhead allocated = ($2 per part* 15 part*100 units) + ($500 per setup * 1 setup) + (($90/60)per…
Q: Required Write a memo explaining why one company's P/E ratio may be higher than another company's…
A: Introduction: The price/earnings ratio reveals investors how much a company is worth. The P/E ratio…
Q: what advice should the controller give the management?
A: Variance in income statement A deviation in accounting is the discrepancy between a planned,…
Watford Refiners is contemplating the acquisition of Surrey Ltd by means of a share issue. The combination of the two firms' operations will result in economies of scale and the additional value generated is estimated to be R20 million. The financial directors of the two companies have agreed to an equal split of this value between each firm's shareholders. It was also agreed that the purchase consideration for the Surrey Ltd acquisition should be based on an exchange of 1.25 shares of Watford Refiners for each share of Surrey Ltd.
Key acquisition data is detailed below:
Company No. of shares Price per share Earnings after Tax
Watford Refiners 8 million R12 R10 million
Surrey Ltd 5 million R9 R7 million
1.1 How much will the shareholders of Surrey Ltd gain or lose on a per share basis.
1.2 Determine the purchase price of Surrey Ltd that is implied by the 1.25 exchange ratio.
1.3 Calculate the
1.4 Calculate the proposed acquisition premium.
1.5 Compute the earnings per share for Watford Refiners before and after the proposed acquisition.
Step by step
Solved in 2 steps
- Firm A has a total market value of RM 200 million. It is planning to acquire Firm B, which has a total market value of RM 630 million. Firm A estimates that the merged firm will be worth RM 3050 million as a result of operating efficiencies. The financial accountants are advising that Firm A will have to pay a premium of RM 24 million in price to acquire Firm B. merger related costs and expenses are estimated at RM 42 million. Is there an advantage arising from merger, in particular to Firm A?Boxer Ltd considered the takeover of Tyson Ltd. Both companies operated in the mining industry, but Tyson Ltd had access to some infrastructure assets that would be useful to the operations of Boxer Ltd. After due consideration including an in-depth financial analysis of the project, on 1 January 2020, Boxer Ltd made an offer to the shareholders of Tyson Ltd: Boxer Ltd would pay two fully paid ordinary shares in Boxer Ltd plus $3.20 cash for every preference share in Tyson Ltd, payable at acquisition date. Boxer Ltd would pay three fully paid ordinary shares in Boxer Ltd plus $1.50 in cash for every ordinary share in Tyson Ltd. Half the cash is payable at acquisition, and the other half is payable in one year’s time. The shareholders of Tyson Ltd took financial advice and the majority decided that this was a worthwhile offer. Of the ordinary shareholders, 90% accepted the offer while of the preference shareholders; all of them accepted the offer. At 30 March 2020, the share capital…A limited is considering making a tender offer for B Ltd. The merger would result in economies of scale (Benefit of synergy) of Rs.20 lakh. The relevant financial information for B Ltd. is as follows: Number of shares outstanding 1,80,000 Earnings per share Rs.12 Market price per share Rs.76 A Limited intends to make a two-tier tender offer wherein it will offer Rs.82 for the first 1, 00,000 shares and Rs.75 for the remaining shares. a. If the tender is successful, how much should A Ltd pay to B Ltd.? b. If the Economies of merger is Rs.20, 00,000, How much of this goes to the Shareholders of A Ltd & B Ltd respectively? How much are the shareholders of A Ltd. And B Ltd. benefitting from the economies of merger?
- Purple Ltd has recently undertaken a business combination with Yellow Ltd. At the start of negotiations, Purple Ltd owned 30% of the shares of Yellow Ltd. The current discussions between the two entities concerned Purple Ltd’s acquisition of the remaining 70% of shares of Yellow Ltd. The negotiations began on 1 January 2022 and enough shareholders in Yellow Ltd agreed to the deal by 30 September 2022. The purchase agreement was for shareholders in Yellow Ltd to receive in exchange shares in Purple Ltd. Over the negotiation period, the share price of Purple Ltd shares reached a low of $5.40 and a high of $6.20. The accountant for Purple Ltd, Mr Nashville, knows that AASB 3 has to be applied in accounting for business combinations. However, he is confused as to how to account for the original 30% investment in Yellow Ltd, what share price to use to account for the issue of Purple Ltd’s shares, and how the varying dates such as the date of exchange and acquisition date will affect the…Boxer Ltd considered the takeover of Tyson Ltd. Both companies operated in the mining industry, but Tyson Ltd had access to some infrastructure assets that would be useful to the operations of Boxer Ltd. After due consideration including an in-depth financial analysis of the project, on 1 January 2020, Boxer Ltd made an offer to the shareholders of Tyson Ltd: a. Boxer Ltd would pay two fully paid ordinary shares in Boxer Ltd plus $3.20 cash for every preference share in Tyson Ltd, payable at acquisition date. b. Boxer Ltd would pay three fully paid ordinary shares in Boxer Ltd plus $1.50 in cash for every ordinary share in Tyson Ltd. Half the cash is payable at acquisition, and the other half is payable in one year’s time. The shareholders of Tyson Ltd took financial advice and the majority decided that this was a worthwhile offer. Of the ordinary shareholders, 90% accepted the offer while of the preference shareholders; all of them accepted the offer. At 30 March 2020, the share…Majan Group is considering the acquisition of Mazvon Company in which Mazoon Company would receive OMR 66.50 for each share of its common stock. The Majan Giroup does not expect any change in its price/earnings multiple after the merger. Majan Group is considering either undertaking the acquisition either through a stock for stock transaction, an all-cash transaction or in a stock and cash transaction. Majan Group intends to borrow the cash involved in the transaction in an interest only loan at an annual rate of 6% with the principal to be repaid as a in 15 years. If the stock and cash transaction is to be considered, Majan Group will pay a purchase price of one share of its stock plus a cash amount equal the difference between the offer share price and the target's share price. The marginal tax rate of Majan Group is 40%. Majan Group Mazoon Company Earnings available for OMR 184,450 OMR 38,150 common stock Number of shares of 81,900 24,500 common stock outstanding Market price per…
- A limited is considering making a tender offer for B Ltd. The merger would result in economies of scale (Benefit of synergy) of Rs.20 lakh. The relevant financial information for B Ltd. is as follows: Number of shares outstanding 1,80,000 Earnings per share Rs.12 Market price per share Rs.76 A Limited intends to make a two-tier tender offer wherein it will offer Rs.82 for the first 1, 00,000 shares and Rs.75 for the remaining shares. a. If the shareholders of B Ltd act together as a Group, will they benefit in terms of price being offered? If so & if not, give reasons.Consider the following data in relation to a proposed acquisition, where Firm B will take over Firm A in a horizontal takeover. Pre-merger Value A $550m Pre-merger Value B $420m Post-merger Value A + B $1,150m Cash Offer $580m Share Offer 52% of Shares in A + B Estimate the gains available from the merger. Estimate the value of the merger to firm A’s shareholders under both the cash and share offer. Estimate the value of the merger to firm B’s shareholders under both the cash and share offer. Which offer will predominate, cash or shares, if the shareholders of A are given the choice?Honesty Company started negotiating for the acquisition of Integnity Company. The offer was for shareholders of Integrity to receive one Honesty share with a market value of P125 for every four shares held in exchange for all assets of Integrity (except shares in listed companies). In addition to the shares, Honesty will transfer its shares in listed companies which has a fair market value of P750,000. Honesty will also pay integrity sufficient cash to enable Integrity to pay all its creditors then Integrity will liquidate. The shareholders of Integrity accepted the offer. The Balance Sheet on December 31, 2020 is given below (see image below). The net assets of Integrity are reflected at their fair values except for the following: Inventory, P1,300,000 fair market value Land and building, P4,000,000 fair market value Shares in listed companies, P900,000 fair market value How much is the total assets of Honesty after the merger? Honesty 7,250,000 1,700,000 2,800,000 800,000 3,500,000…
- Firm E is going to acquire Firm F. The acquisition will be done via a share exchange, whereby Firm E will exchange 2.65 of its shares for every one of Firm F's shares. Synergy is $1,250,000 in total. Firm E has 350,000 shares outstanding trading at $35 each. Firm F has 45,000 shares outstanding trading at $84 each. What would the exchange ratio have to be for the NPV of the deal to be zero? Question 1 options: A) 3.13 shares of E for every 1 of F B) 0.41 shares of E for every 1 of F C) 3.15 shares of E for every 1 of F D) 2.40 shares of E for every 1 of F E) 3.19 shares of E for every 1 of FCalculate the post-acquisition increase/decrease price of the share if Tim Limited acquires Polo Limited forR45 million. Assume that Tim Limited has 7 million shares with a market price of R7.00 per share and Polo Limitedhas 5 million shares with a market price of R5.00 per share. The synergy of this merger is R11 million.Pearl, Incorporated, has offered $197 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $178 million as an independent operation. If the merger makes economic sense for Pearl, what is the minimum estimated value of the synergistic benefits from the merger?