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revision mock

Forums › ACCA Forums › ACCA FM Financial Management Forums › revision mock

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by AvatarJohn Moffat.
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  • December 9, 2015 at 3:05 am #289399
    Avatarkebeori
    Member
    • Topics: 5
    • Replies: 0
    • ☆

    Apple plc is thinking of acquiring Orange – an unquoted building company.
    Orange currently paying a dividend of $0.20 per share and has a dividend cover of 3.2.
    Apple has found that quoted building companies have an average PE ratio of 9.

    Which is the following would be the most sensible offer per share that Apple should make to Orange, based on the above information?

    December 9, 2015 at 8:48 am #289472
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54846
    • ☆☆☆☆☆

    EPS = 3.2 x $0.20 = $0.64

    Therefore the MV = 9 x $0.64 = $5.76.

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