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Mock Examz MCQ's

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Mock Examz MCQ's

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.
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  • August 26, 2015 at 4:03 pm #268642
    Mujtaba
    Member
    • Topics: 13
    • Replies: 10
    • ☆

    Apple plc is thinking of aquiring orange an unquoted building company.orange currently paying a dividend of $.20 per share and has a dividend cover of 3.2.Apple has found that quoted building companies have an average P/E ratio of 9.
    which of the following would be the most sensible offer per share that Apple should make to Orange based on the above information?

    Please show working. Thanks

    August 27, 2015 at 8:25 am #268735
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    EPS of Orange = 3.2 x $0.20 = $0.64

    Market value of Orange = 9 x $0.64 = $5.76

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