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Exercice : TOP Co is planning to by HOP Co , a company in the same business sector, and is considering paying cash for the
Exercice :
TOP Co is planning to by HOP Co a company in the same business sector, and is considering paying cash for the shares of the company. The cash would be raised by the TOP Co through a for rights issue at a discount to its current share price.
The purchase price of the million issued shares of HOP Co would be equal to the rights issue funds raised, less issue costs of Earnings per share of HOP Co at the time of acquisition would be cents per share. As a result of acquiring HOP Co TOP Co expects to gain annual aftertax savings of
TOP Co maintain a payout ratio of and earnings per share are currently cents per share. Dividend growth of pa is expected for the foreseeable future and the company has a cost of equity of pa
Financial information from TOP Co statement of financial position:
Statement of financial position information:
Equity & Liabilities
Ordinary shares par value
Reserves
Equity, Total
Noncurrent liabilities :
Bank loan notes
Current liabilities, Total
Equity & Liabilities, Total
ADDITIONAL DATA FOR CALCULATIONS :
TOP Co dividend per share per share
Share price of TOP Co
Market capitalisation of TOP Co million
PriceEarnings ratio of TOP Co
Assuming the rights issue takes place and ignoring the proposed use of funds raised, calculate:
Current earnings per share before rights issue for TOP Co
Question : Select one:
a
b
c
d
e
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