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BPP question 42 Sigra Co Dec 12

This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.

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November 19, 2018 at 3:11 pm #485244
Saimon
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Gain from share for share exchange :
Sir ,
In this part i didn’t understand why share price of combined company was used to measure the gain
and
((3*3.644)-(2*4.50))/”2″
Sir here i didn’t understand why “((3*3.644)-(2*4.50))” was divided by “2”
November 20, 2018 at 7:22 am #485288
John Moffat
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For every 2 shares that were worth 4.50 each, they now have 3 shares worth 3.644 each.
Therefore the gain is (3 x 3.644) – (2 x 4.50) for every 2 shares they owned.
Since this is the gain for 2 shares, we divide by 2 to get the gain per share.
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