Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P 2-14 (similar to) Question Help Quisco Systems has 6.3 billion shares outstanding and a share price of $16.17. Quisce is considering cevropi working product

image text in transcribed
P 2-14 (similar to) Question Help Quisco Systems has 6.3 billion shares outstanding and a share price of $16.17. Quisce is considering cevropi working product in house at a cost of $512 milion. Alternatively, Quiso can acquire a firm that already has the technology for $939 milion worth the current price of Oulsce stock. Suppose that of the new technology, Quisce will have EPS of $0.89 Suppose Quince develops the product in house. What impact would the development cost have on Quisco's EPS? Assume all costs are incurred this year and are treated as an R&D expense. Quisco's tax rate is 35%, and the number of shares outstanding is unchanged 1. Suppose Quince does not develop the product in house but instead acquires the technology. What effect would the acquisition have on Quisoo's EPs this year? (Note that acquisition expenses do not appear directly on the income talement Asume the fem was acquired at the start of the year and has no revenues or expenses of its own, so that they offect on EPS is due to the change in the number of shares outstanding) Which method of guing the technology has a smaller impact on earnings is a method cheaper? Suppose uso develops the product in house. What impact would the development cost have an uisco's IPS? Assume all costs are incurred this year and are treated as an R&D expense, Quis.co's tax rate is 25%, and the number of shares standing is unchanged Quico's new EPS would be (Round to the nearest cent)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Eugene BrighamPhillip Daves

1st Edition

0324594712, 9780324594713

More Books

Students also viewed these Finance questions

Question

2. What role should job descriptions play in training at Apex?

Answered: 1 week ago