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when the question asks about ‘premium’ does it refers to the revenue or profit ?
The reason is because, in MAKONIS CO[DEC13] uses the word premium as revenue while
in in VOGEL CO[JUN 14] utilizes the word as profit ( revenue – cost = profit )
so i’m not sure when the question uses the premium, whether i should write down revenue or profit of the calculation.
i really appreciate your help
These questions do not use profit or revenue!
The word premium simply means extra, but in the context of both these questions it means the premium over and above the current share price of the company being acquired. This can be calculated on either the total market value of the shares or on the market value per share – they are the same thing.
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