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So the question asks discuss the factors which determine the long-term finance policy
Can I mention the factors based on which a company decides their long-term finance policy is:
the level of gearing they want to maintain
sources of finance they want to use
period for which loan should be taken?But normally we calculate the synergy benefit by taking the combined market value of equity less individual company market value of equity right?
In this question only we took total market value.
But to calculate the synergy benefit in every other questions I have done, we deduct the date from the total market value, this question is an exception as we are taking the total value of the company instead of the total market value of equity.
Can you please help understand that concept?
Thank you so much Sir!
The question Nahara Co had expected value calculations to be done. So I was worried if we have to cover all that.
Sir, if Makonis share for share exchange is 2 for 1, it means they are giving them 100 shares (200/2*1) but how do we determine the value of the share on which we are giving them? Would it stay 5.8? I understood the premium we have to pay and all but I want to know if I acquire a company through share exchange, how do I determine how much I am paying for 1 share of the company. In this question they took $5.8 I believe but I am confused.
Thank you Sir. So it is basically value adding to the combined company as for one we are receiving funds by selling the asset and from another we are making a new compnay which we will own?
Why do we add the value of Nedge Co (department B) and proceeds from sale of assets of Department C with the combined company?
Sir, one more question is that in part b when we calculate the PE ratio implied, the EPS is constant for all offers to get the PE ratio, we calculate the new eps in part c.
I do not understand if the PE ratio will change based on the offer as Market value of shares is chainging, why is the earnings not changing in part b?
How do we understand when to do using per share and when to do with total shares?
How do we understand when to calculated what as Wesparley question asked to calculate the total value the shareholders will gain from the acquisition and Chikepe question asked to calculate the benefit to the shareholders from aquisition.
How do you determine one is asking for synergy split?
Sorry, this is a stupid question but I am really facing difficulty understand the difference between these two question requirements.
Thank you so much!
Westparley is March 2020, to find the gain to Westparley shareholders, they deducted debt in b (ii), but in Chekepe Co June 2018, we just deduct the premium from synergy to find if the aquisition is benefical to Chikepe Co.
Can you please help me understand the difference between the two requirements?
In one total combined market value – equity value of each individual companies – premium is the benefit to acquirer.
In another (westparley), they deduct debt, equity to get to the value.
My concept is not clear in this, please help me clear my concept.
Thank you so much!
One question, when we use the multi growth model, growth is different for first few years but same for 5 years an onward, why do we then discount it to present value?
We are calculating the MV of Tai Co pre acquisition where we get the free cash flows of $1399.51 (after taking into account the growth of 3% for the forseeable future. Why are we not discounting this to the present value using the cost of capital?
I had another question, in the answer when they discuss which offer is to be taken they mention about 12%:
Opao Co’s shareholders benefit less from the acquisition compared to Tai Co’s shareholders. In each case, they get less than
the additional value created of 12%, with the cash payment offering the highest return of 11·2%, which is just below the 12%
overall return.How are they getting the 12%?
heyy!!! thnx for all the support :D!!!!! and ya ur soo right about not leaving anything unclear….
and i definitely take a look at the materials u recommended!!!
and dnt worry….u will definitely pass this August….!!!:D!!! i admire ur level of confidence!!! 🙂
and abt the question … ya….pls do reply whn u read abt it…..kind of stuck in it….
thnx once agn!!! tc!! 😀
aaa r u saying they take the total inventory cost and divide it with the total unit so as to get the per unit cost??? and since ABC reflects a more accurate unit costs…..so inventory will be calculated more accurately..???…thereby more efficiency in managing inventory :S??
n woww !!!! ur a finalist!!!! Hopefully u will get the best results..dnt wrry!!!! 😀
