Jack Pang is the financial controller of World Cruise Bhd. (World) and he is considering the possible acquisition of a smaller tour company, Sunrise Cruise Bhd. (Sunrise) by cash financing. He has to make a recommendation in the coming Board of Directors meeting on the proposed acquisition. He has the following financial information for both companies: World Cruise Bhd. RM5 Sunrise Cruise Bhd. Forecast earnings per share Forecast dividend per share Number of shares Price per share RM3.50 RM3 RM0.80 1,000,000 shares RM150 600,000 shares RM20 Jack Pang has estimated that the investors currently expect a steady growth of about 6% in Sunrise's earnings and dividends. He believes that World could increase Sunrise 's growth rate by 9% per year without any additional capital investment.

Jack Pang is the financial controller of World Cruise Bhd. (World) and he is considering the possible acquisition of a smaller tour company, Sunrise Cruise Bhd. (Sunrise) by cash financing. He has to make a recommendation in the coming Board of Directors meeting on the proposed acquisition. He has the following financial information for both companies: World Cruise Bhd. RM5 Sunrise Cruise Bhd. Forecast earnings per share Forecast dividend per share Number of shares Price per share RM3.50 RM3 RM0.80 1,000,000 shares RM150 600,000 shares RM20 Jack Pang has estimated that the investors currently expect a steady growth of about 6% in Sunrise's earnings and dividends. He believes that World could increase Sunrise 's growth rate by 9% per year without any additional capital investment.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 7P

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