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Hi Sir,
part(a) option two
Calculation regarding the exchange of 3 shares for 2 shares is confusing
is there any alternative solution for that i can come up with
please how can we go with any other easy approach for that if any ??
i can rote this technique but in exam if i find something else will find difficulty for meYou will have to say which bit you find confusing.
There are currently 500,000/0.4 = 1,250,000 shares in Dentro.
If they are getting 3 shares for every 2 shares, then they will get 1,250,000 x 3/2 = 1,875,000 shares in Sigra.
There is no alternative solution!!
confusion part is
gain per dentro co share = (3 * 3.644) – (2 * 4.50)/2 = $0.966
if they already arrived at 1,875,000 shares why mutliply combined share price by 3 and then dentro co share price by 2 and deducting one from another.
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