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I need help with this question please! As financial manager of Corton Inc., you are investigating a possible acquisition of Denham. You have the basic
I need help with this question please!
As financial manager of Corton Inc., you are investigating a possible acquisition of Denham. You have the basic data given in the following table. Forecast earnings per share Forecast dividend per share Number of shares Stock price Corton $ 6.00 $ 3.60 1,500, see $ 90 Denham $ 1.60 $ .85 1,100,000 $ 2e You estimate that Investors expect a steady growth of about 6% In Denham's earnings and dividends. Under new management, this growth rate would be increased to 8.27% per year without the need for additional capital. Required: a. What is the galn from the acquisition? b. What is the cost of the acquisition if Corton pays $25 in cash for each share of Denham? c. What is the cost of the acquisition if Corton offers one share of Corton for every one shares of Denham? d. How would the cost of the cash offer change if the expected growth rate of Corton was not changed by the merger? e. How would the cost of the share offer change if the expected growth rate was not changed by the merger? (For all requirements, do not round Intermediate calculations. Enter your answers in millions rounded to 2 decimal places.) a. Gain b. Cost million million million c. Cost d. Cash offer Share offer million million As financial manager of Corton Inc., you are investigating a possible acquisition of Denham. You have the basic data given in the following table. Forecast earnings per share Forecast dividend per share Number of shares Stock price Corton $ 6.00 $ 3.60 1,500, see $ 90 Denham $ 1.60 $ .85 1,100,000 $ 2e You estimate that Investors expect a steady growth of about 6% In Denham's earnings and dividends. Under new management, this growth rate would be increased to 8.27% per year without the need for additional capital. Required: a. What is the galn from the acquisition? b. What is the cost of the acquisition if Corton pays $25 in cash for each share of Denham? c. What is the cost of the acquisition if Corton offers one share of Corton for every one shares of Denham? d. How would the cost of the cash offer change if the expected growth rate of Corton was not changed by the merger? e. How would the cost of the share offer change if the expected growth rate was not changed by the merger? (For all requirements, do not round Intermediate calculations. Enter your answers in millions rounded to 2 decimal places.) a. Gain b. Cost million million million c. Cost d. Cash offer Share offer million millionStep by Step Solution
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