Question

W
Choudhary
Valuation Practical Problems
Question 5
XYZ Ltd. is inte
available in respect of both the companies:
intending to acquire ABC Ltd. by merger and the following information is
No. of equity shares
Profit after tax (Rs.)
Market price per share (Rs.)
XYZ Ltd.
5,00,000
25,00,000
21
ABC Ltd.
3,00,000
9,00,000
14
(i) Calculate the present EPS of both companies.
(ii) If the proposed merger takes place, what would be the new EPS for XYZ Ltd ?
(1 mark)
Assume that the merger takes place by exchange of equity shares and the exchange ratio
is based on the current market price.
(iii) Will you recommend the merger of both the companies ? Justify your answer.
(3 marks)
(2 marks)​

Answer 1

accha.It is a great question