Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

The management of Mitchell Labs decided to go private in 2002 by buying in all 3 million of its outstanding shares at $19.50 per share. By 2006, management had reconstructed the company by selling off the petroleum and synthetic products division for $21 million. Because these divisions had been only marginally profitable, Mitchell is now able to concentrate exclusively on contract research and will generate earning per share of $1.25 this year. Investment bankers have contacted the firm and indicated that if it reentered the public market the 3 million shares it purchased to go private could now be reissued to the public at P/E ratio of 16 times earnings per share.

a. What was the initial cost to Mitchell Labs to go private?

b. What is the total value to the company from (1) the proceeds of the divisions that were sold, as well as (2) the current value of the 3 million shares (based on current earnings and an anticipated P/E of 16?

c. What is the percentage return to the management of Mitchell Labs from the reconstructing? Answers from a and b will determine this value

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M942224

Have any Question? 


Related Questions in Basic Finance

1 how do researchers maintain the confidentiality of

1. How do researchers maintain the confidentiality of participants' responses? 2. Describe the Milgram (1963) study and discuss the ethical issues it raised. 3. What are the basic ethical principles that animal researche ...

How is that process-that curve-modified if this is a sheet

How is that process-that curve-modified if this is a sheet metal joint? Do variations in friction between male and female threads affect the torque-turn relationship? Describe the turn-of-nut procedure used in structural ...

A uk-based multinational company has sold an overseas

A UK-based multinational company has sold an overseas chemical plant, the price for the plant being determined by an earn-out agreement. The amount of the receipt under the agreement is likely to be $10m, with a maximum ...

Crypton electronics has a capital structure consisting of

Crypton Electronics has a capital structure consisting of 41% common stock and 59% debt. A debt issue of $100 0par value, 5.8% bonds that mature in 15years and pay annual interest will sell for $975. Common stock of the ...

1 explain what happens to the postmerger earnings per share

1. Explain what happens to the postmerger earnings per share figure when a company with a relatively high P/E ratio acquires a company with a lower P/E ratio, assuming that the exchange ratio is based on current stock ma ...

1 what is the relationship between the variables in a loan

1. What is the relationship between the variables in a loan amortization calculation and the total interest cost? Consider the variables of interest rates amount borrowed, down payment, prepayment, and term of loan in an ...

1 when a longitudinal design reveals a change in behavior

1. When a longitudinal design reveals a change in behavior over time, why can we not conclude that the change is due to development? 2. What are generational effects, and why do they sometimes create a problem in cross-s ...

1 in addition to the key words you should also be able to

1. In addition to the key words, you should also be able to define the following terms: third-variable problem directionality problem confounding variable random process placebo mundane realism experimental realism 2. De ...

Design grammars for the following languagesa the set of all

Design grammars for the following languages: a) The set of all strings of 0s and 1s such that every 0 is immediately followed by at least one 1. ! b) The set of all strings of 0s and 1s that are palindromes; that is, the ...

Calculate the total lift force on the arctic hut shown

Calculate the total lift force on the Arctic hut shown below as a function of the location of the opening. The lift force results from the difference between the inside pressure and the outside pressure. Assume potential ...

  • 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