Question
The Jeter Corporation is considering acquiring the A-Rod Corporation. The data for the two companies are as follows: A-Rod Corporation Jeter Corporation Total earnings $
The Jeter Corporation is considering acquiring the A-Rod Corporation. The data for the two companies are as follows:
| A-Rod Corporation | Jeter Corporation | |
|---|---|---|
| Total earnings | $ 728,000 | $ 3,600,000 |
| Number of shares of stock outstanding | 280,000 | 1,800,000 |
| Earnings per share | $ 2.60 | $ 2.00 |
| Price-earnings ratio (P/E) | 20 | 26 |
| Market price per share | $ 52 | $ 52 |
The Jeter Corporation is going to give A-Rod Corporation a 50 percent premium over A-Rods current market value. What price will it pay?
Note: Do not round intermediate calculations and round your answer to the nearest whole number.
Price:
At the price computed in part a, what is the total market value of A-Rod Corporation? (Use the number of A-Rod Corporation shares times price.)
Note: Do not round intermediate calculations. Input your answer in dollars, not in millions (e.g. $1,234,000). Round your final answer to the nearest whole number.
Market Value:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Modeling An Introductory Guide To Excel And VBA Applications In Finance
Authors: Joachim Häcker, Dietmar Ernst
1st Edition
1137426578, 978-1137426574
