Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: Hampshire- Cathway HC a large corporation with no growth in its real earnings is considering acquiring 100 percent of the shares of Trilennium Corporation, a young firm with the high growth rate of earnings. The acquisitions examine group at HC has produced the following table of relevant information.

 

Hampshire Cathaway

Trilennium

Earnings per share

$3

$2

Dividend per share

$3

$0.80

Number of shares

200 million

10 million

Stock Price

$30

$20

HC's analysts determine that investors expect growth of about 6 percent per year in Tirlenniums earnings & dividends. They suppose that with the improvements in management that HC could bring to Trilennium, its growth rate would be 10 percent per year with no additional investments outlays beyond those already expected.

[A] Determine the expected gain from the acquisitions?

[B] find out the net present value of the acquisition to HC shareholders if it costs an average of dollar 30 per share to acquire all of the outstanding shares.

[C] Would it matter to HC's shareholders whether the shares of Trilennium stock are acquired by paying cash or HC stock?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918023

Have any Question? 


Related Questions in Basic Finance

1 why do researchers care how much variability exists in a

1. Why do researchers care how much variability exists in a set of data? 2. Distinguish between descriptive and inferential statistics. 3. Conceptually, what does the variance tell us about a set of data?

What is meant by break even drivers identify two important

What is meant by break even drivers? identify two important drivers affecting the amount of revenues needed for ventures to break even Explain

1 explain how the process of counterbalancing attempts to

1. Explain how the process of counterbalancing attempts to keep order effects from becoming a confounding variable in a within-subjects design. 2. Explain how statistical regression and instrumentation threaten the inter ...

Marks inc expect a dividend of 520 per share in one year

Marks, Inc., expect a dividend of $5.20 per share in one year from now. The rate of return is 13% and the growth rate is 6.8%. How much would you be willing to pay for Marks' stock today? If the current market price of M ...

What distinguishes an ordinary annuity from an annuity due

What distinguishes an ordinary annuity from an annuity due? What distinguishes an ordinary annuity from a deferred annuity? If a cash flow is the same amount each period, ad infinitum, how do we value the present value o ...

What is meant by break even drivers identify two important

What is meant by break even drivers? Identify two important drivers affecting the amount of revenues needed for ventures to break even Explain

What is the yield to call of a 20 year to maturity bond

What is the yield to call of a 20 year to maturity bond that pays a 11.13 percent per year, has a $1,000 par value and is currently priced at $1,143? The bond can be called back in 5 years at a call price $1,083. Assume ...

Compare and contrast the cash conversion cycles ccc of

Compare and contrast the cash conversion cycles (CCC) of Caterpillar Inc. (ticker: U:CAT), Ingersoll-Rand Company Limited (U:IR), and Terex Corp. (U:TEX). Calculate the average age of inventory (AAI), average collection ...

M banking assignmentstudy guide for essay questions

Money Banking Assignment Study guide for essay questions. Compiled from questions your colleagues submitted. 1) What are the main functions of: a) the Federal Reserve (details of how the Fed performs its functions, prima ...

Question 1 - suppose that the capital asset pricing model

Question 1 - Suppose that the Capital Asset Pricing Model (CAPM) holds. The market portfolio has an expected return of 10% and standard deviation 15%. The risk-free rate is 4%. Stock A has a beta of 1.4 and standard devi ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen