Question
The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation. Information about each firm is given here: Flannery Stultz
| The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation. Information about each firm is given here: |
| Flannery | Stultz | |||||
| Price-earnings ratio | 9.9 | 29 | ||||
| Shares outstanding | 78,000 | 290,000 | ||||
| Earnings | $ | 260,000 | $ | 990,000 | ||
| Flannerys shareholders will receive one share of Stultz stock for every three shares they hold in Flannery. |
| a-1. | What will the EPS of Stultz be after the merger? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) |
| a-2. | What will the PE ratio be if the NPV of the acquisition is zero? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| b. | What must Stultz feel is the value of the synergy between these two firms? (Do not round intermediate calculations.) |
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Beyond Greed And Fear Understanding Behavioral Finance And The Psychology Of Investing
Authors: Hersh Shefrin
1st Edition
0195161211, 978-0195161212
