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Corporate Governance: Overiting Earnings. During s , many congwe were cred by me that were e ngag i ngs (P/E). These firmen ned their hoy

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Corporate Governance: Overiting Earnings. During s , many congwe were cred by me that were e ngag i ngs (P/E). These firmen ned their hoy alud mock tow e r had lower P/E ratios w in related domestic industries Conglomers went out of fashion during 1900 when they are high Prisus making more of to find other forms with lower PE mation to acquire During the the same acquiston stresy was posible for fes located in countries where PE were common compued to her o nes where w PE ratios were common consider the hypothetical forma in the pharmaceutical Industry shown in the table below cick on the contempor ne a no a spreadsheet Modem American wants to acquire Modonicaters 5.500.000 shares of Modern American with a contartet auf 1220,000,000 anda 10 premium on Modolini share, for all of Modenice's shares Market value Number of shares 10,000,000 10,000,000 31.10 Mode Unice Modern American Market Value 5220 000 000 $440,000,000 Tuuleti 4-6 fulgorit ) Market value Market Value Company Modelnice Modem American Number of shares 10.000.000 10.000.000 Earnings $11,000,000 $11,000,000 $1.10 144.00 $1.10 1440,000,000 a. How many shares would Modem American have outstanding here istion of Medico? b. What would be the consolidated earnings of the combined Modem American and Migonice? c. Assuming market continues to capital Modem America's amings at a P r oof 40, what would be the market value of Modern American d. What would be the new coming per share of Modem American What would be the new market value of a share of Modern American? 1. How much would Modern Americans sonce increase g. A number of firms, especially in the United States, have had to lower their previously reported earnings due to accounting mors or fraud. Assume that Modem American had to lower is earrings to $5.500.000 from the previously reported $11,000,000. What might be its new market value prior to the auto? Could still do me acquisition

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