Hi Sir, how are you doing?
Please help me to undestand this matter.
I was calculating the market value of CRX Co shares before the acquisition and I realised that in the correction paper that the PER of THP Co is used to calculate the market value of CRX Co shares.
Why should we use the THP Co ( $7,5) to calculate the market value of CRX Co shares in that situation? I think that is due of both of the companies are in the same sector, am I right?
Best regards
ET
Ask the Tutor ACCA FM
Exam Question June 2008 - Qustion 2 - c)
12y ago#1Sorry for the delay in replying - somehow I missed your question :-(
Yes - it is because both companies are in the same sector and therefore you would expect a similar PE ratio.
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