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Sir, sorry to ask this.
But can i know why are we using value per share of Louieed Co to calculate the value per share of Tidded Co for the proposed offer?
)Sir, in this question part (c), can we use gearing ratio = debt / equity rather that the suggested answer in which gearing ratio is calculated as debt/(debt + equity)?
Sorry – it was because of the other question that appeared 🙁
It is because it is because Louieed is offering new shares and so the PE implied by the new issue is calculated basis on the current share price. (Obviously what actually happens depends on whether or not the offer is accepted, but the question asks what PE is implied by the offer).
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