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CIMA Exam CIMAPRA19-F03-1 Topic 3 Question 52 Discussion
Actual exam question for
CIMA's
CIMAPRA19-F03-1 exam
Question #: 52
Topic #: 3
[All CIMAPRA19-F03-1 Questions]
Topic #: 3
Listed company R is in the process of making a cash offer for the equity of unlisted company S.
Company R has a market capitalisation of $200 million and a price/earnings ratio of 10.
Company S has a market capitalisation of $50 million and earnings of $7 million.
Company R intends to offer $60 million and expects to be able to realise synergistic benefits of $20 million by combining the two businesses. This estimate excludes the estimated $8 million cost of integrating the two businesses.
Which of the following figures need to be used when calculating thevalue of the combined entity in $ millions?
Suggested Answer:
A
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