another one is on paper JUNE 12 Q1. I am not understand what useful of this sentence in the question:
it has sufficient cash to pay for Nente Co's equity and substantial proportion of its debt, and believe that this will enable Nente Co to operate on a P/E level of 15 as well. if this sentence is useful, why 15 should not be uses when calculate the value of Nente. thanks John
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11y ago#1It is because part (i) of the question specifically asks you to use the free cash flow approach.
The PE is used later in part (ii).
For the second one you answered. I know 15 should be used in the part ii. The 15 in part ii is Mije'P/E. not this number I stated above. What useful about this 15 I stated sentence above. Thanks.
11y ago#3But if Nente's PE was not 15 as well, them Mije's PE would likely change after the acquisition.
This is effectively just telling you that the PE will stay at 15.
Ok. Thanks. John.
11y ago#5No problem :-)
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