ABC Itd has eaming level of Tshs $500,000$ if invested back, in the business it can eam Tshs $150,000=$ additional. The investors in of ABC Itd have expectation of $35\%.$

Use Walters model or ABC

Required:

Calculate the value of ABC if its payout ratio is

a$)0\%$

b$)30\%$

c$)60\%$

a$)$ Define a warrant

b$)$ Explain the difference between a convertible security and warrant.

$3.$ a$)$ Define management buyout

b$)$ How is leveraged buyout valued?

c$)$ The following data relate to companies A and $B$

$\backslash$table$[[,$A$,$B$],[$Profit after tax $($Tsh$),100,000,20,000],[$equity share,$50,000,5000],[$P$/$E$,20,10]]$

Required:

a$)$ Determine exchange ratio

b$)$ Determine EPS after merger.