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djverab [1.8K]
3 years ago
13

Harrods PLC has a market value of £139 million and 5 million shares outstanding. Selfridge Department Store has a market value o

f £41 million and 2 million shares outstanding. Harrods is contemplating acquiring Selfridge. Harrods' CFO concludes that the combined firm with synergy will be worth £195 million, and Selfridge can be acquired at a premium of £10 million. a. If Harrods offers 1.2 million shares of its stock in exchange for the 2 million shares of Selfridge, what will the stock price of Harrods be after the acquisition? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b, What exchange ratio between the two stocks would make the value of a stock offer equivalent to a cash offer £51 million? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.)
Business
1 answer:
Eva8 [605]3 years ago
4 0

Answer:

(a) The stock price of Harrods be after the acquisition is £ 31.45

(b) The exchange ratio between the two stocks would be 0.8550

Explanation:

Harrods PLC has a market value of £139 million and 5 million shares outstanding.

Selfridge Department Store has a market value of £41 million and 2 million shares outstanding.

a)  If Harrods offers 1.2 million shares of its stock in exchange for the 2 million shares of Selfridge

Shares outstanding = 5 + 1.2 = 6.2 million

Stock price = £ 195 million ÷ 6.2 million = £ 31.45

b)  alpha × 195 = 51

alpha = £51  million ÷ £195 million

= 26.15%

(195 ÷ ( 5 +X ) ) × X = 51

51 (5+X) = 195X

255 + 51X = 195X

144X = 255

X = 1.77 million shares

Exchange ratio would be: 1.77 ÷ 2

= 0.8550

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Concord Corporation had the following transactions during 2022: 1. Issued $190000 of par value common stock for cash. 2. Recorde
sergejj [24]

Answer:

The net cash provided by financing activities -$157,600.

Explanation:

Net cash provided by financing activities refers to the difference between the total cash inflows and total cash outflows from the financing activities section of the cash flow staement.

The net cash provided by financing activities can be calculated by preparing a partial cash flow statement as follows:

Concord Corporation

Net Cash Flow Statement (Partial)

As at December 31, 2022

<u>Details                                                                     Amount    </u>

Par value common stock issued for cash             190,000

Dividend declared and paid in cash                      (15,200)

6-year note payable repaid                                <u>  (334,400)  </u>

Net cash provided by financing activities      <u>   (157,600)   </u>

Therefore, the net cash provided by financing activities -$157,600.

Alternatively, the net cash provided by financing activities can be calculated as follows:

Net cash provided by financing activities = Par value common stock issued for cash - Dividend declared and paid in cash - 6-year note payable repaid = $190,000 - $15,200 - $334,400 = -$157,600

7 0
2 years ago
Suppose an institution has purchased a $250,000 mortgage loan from the loan originator and wishes to create a mortgage pass-thro
Andre45 [30]

Answer: $1,177

Explanation:

First we calculate the Monthly service fee by the formula,

Monthly servicing fee = Monthly servicing fee rate * Outstanding loan balance,

The service fee is 35 basis points which translates to 0.35 % and is an annual figure so we will adjust it to a monthly one,

= (0.35%/12) * $250,000

= $72.92

To calculate amount that passes through to the mortgage pass we do,

Mortgage pass-through amount = Monthly mortgage payment - Monthly servicing fee

= $1,250 - $72.92

= $1,177.08,

= $1,177

$1,177 is the income that will pass through to the investor in the mortgage pass through each month

6 0
3 years ago
Which of the following is an example of a Specialty store? a. Big Lots c. Macy’s b. Wal-Mart d. PetSmart
erik [133]

Answer:

<u>PetSmart</u> is an example of a speciality store.

Explanation:

It sells stuff only related to pets, unlike the other stores mentioned.

7 0
2 years ago
Which of the following statements is correct?
AysviL [449]

Answer:

In state welfare capitalism, the government plays an active role in regulating economic activities in an effort to smooth out the boom-and-bust pattern of the business cycle

Explanation:

Nations that adhere to capitalism on the premise of social welfare are characterized by state regulation aimed at protecting the population and ensuring a healthy standard of living. This is especially relevant because it protects citizens from economic instability. Typically, countries where social welfare works, many jobs are public, and the state has several social programs. Examples are Sweden, Norway and Denmark.

7 0
2 years ago
margo borrows $800, agreeing to pay it back with 5% annual interest after 7 months. how much interest will she pay?
Gala2k [10]

Answer:

23

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800 * 5% * (7/12) = 23.333

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7 0
1 year ago
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