Q. The shareholders if XYZ Company has voted in favor of a buyout offer from ABC Corporation. Information about each firm is given here:

Price-earnings ratio XYZ 18.2 ABC 30 Shares outstanding XYZ 78,000 ABC 300,000 Earnings XYZ $130,000 ABC $910,000 XYZ's shareholders will receive one share of ABC stock for every three shares they hold in XYZ.

1. Illustrate what will the ESP of ABC be after the merger?

2. Illustrate what will the PE ratio be if the NPV of the acquisition is zero?

3. Illustrate what must ABC feel is the value of the synergy between these two firms?

2) You're analyzing a project also have arranged the subsequent data:
Cash flow in yrs:
1. $169,000
2. $46,200
3. $87,300
4. $41,000
5. $39,000
Required payback: 2.5 yrs
Required AAR: 7.25percent (%)
Required return: $8.5percent (%)
Compute the profitability index? Should you accept the project? Please elucidate how all work.