World Enterprises is determined to acquire Intous Ltd through exchanging stocks. World Enterprises is offering R65 per share for Intous ltd. You are given the following information World Enterprises Intous Ltd Net Income R50 R10 Shares outstanding 5000 2000 Earnings per share R10 R5 Market price per share R150 Price earnings ratio R15 a. Calculate the number of shares to be issued by Intous Ltd: b. Calculate combined earnings per share of both World Enterprise and Intous Ltd c. Calculate price earnings ratio (P/E ratio) paid (Hint: use the R65 to calculate the P/E ratio)
World Enterprises is determined to acquire Intous Ltd through exchanging stocks. World Enterprises is offering R65 per share for Intous ltd. You are given the following information World Enterprises Intous Ltd Net Income R50 R10 Shares outstanding 5000 2000 Earnings per share R10 R5 Market price per share R150 Price earnings ratio R15 a. Calculate the number of shares to be issued by Intous Ltd: b. Calculate combined earnings per share of both World Enterprise and Intous Ltd c. Calculate price earnings ratio (P/E ratio) paid (Hint: use the R65 to calculate the P/E ratio)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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World Enterprises is determined to acquire Intous Ltd through exchanging stocks. World Enterprises is offering R65 per share for Intous ltd. You are given the following information
| World Enterprises | Intous Ltd | |
| Net Income | R50 | R10 |
| Shares outstanding | 5000 | 2000 |
| Earnings per share | R10 | R5 |
| Market price per share | R150 | |
| Price earnings ratio | R15 |
a. Calculate the number of shares to be issued by Intous Ltd:
b. Calculate combined earnings per share of both World Enterprise and Intous Ltd
c. Calculate price earnings ratio (P/E ratio) paid (Hint: use the R65 to calculate the P/E ratio)
d. Compare the current and paid P / E ratios
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