The following table show pre-merger figures of CH Enterprises and ComYon Corpora
ID: 2709521 • Letter: T
Question
The following table show pre-merger figures of CH Enterprises and ComYon Corporation:
Note: This merger will produce no gains. Thus, total earnings and total market value should be unaffected by the merger. But earnings per share increase. CH Enterprises will use 50,000 of its shares (proced at $40) to acquire the 100,000 shares of ComYon (priced at $20).
Complete the table with the correct postp-merger figures.
**PLEASE SHOW ALL STEPS AND FORMULAS TO SOLUTIONS, THANK-YOU!**
CH Enterprises (Pre-Merger) ComYon Corp.(Pre-Merger) CH Enterprises (Post-Merger) 1) EPS $2.00 $2.00 ? 2) Price per Share $40 $20 ? 3) P/E Ratio 20 10 ? 4) # of Shares 100,000 100,000 ? 5) Total Earnings $200,000 $200,000 ? 6) Total Market Value $4,000,000 $2,000,000 ? 7) Current Earnings per Dollar Invested in stock (line 1/line 2) $.05 $.10 ?Explanation / Answer
PE= P/E1* E1/E12+P/E2*E2/E12
P/E12=15
Total Market Value=6000000
EPS= $2.6
Price per share = 39
if PE is known and earnings are known then applying PE formula
Total Market Value=6000000
Total Earnings=400000
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