in LOUIEED CO ( MAR / JUN 16 ),
in part (b), in the calculation of the " value of Tidded Co share per original bid" then answer sheet have stated it's
$20.32 = $12.19 x (5/3)
My questions are
1. why did they use 5/3 ? isn't this offer get rejectedby Tidded Co's board ? as it's clearly stated in the question 4th paragraph
2. Even if they did use 5/3, doesn't this fraction only applies to the number of shares (not affecting share price) ????
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LOUIEED CO ( MAR / JUN 16 )
8y ago#11. The question clearly asks for the PE ratios implied by the terms of the initial and proposed offers. The initial offer was 5 shares for every 3. The fact it was rejected is not relevant - the question specifically still asks for it.
2. If you are offered 5 new shares for every 3 existing, then it means that for every 3 shares you are effectively being paid the value of the 5 new shares.
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