Wall Street Prep
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to calculate interest expense in the future, you should do which of the following -
✔✔✔ANSWER-apply a weighted average interest rate times the average debt
balance over the course of the year
Under recapitalization accounting - ✔✔✔ANSWER-The purchase price is
reflected as a reduction to equity
, Use the following information to answer the question below:
• Acquisition takes place on July 1, 2013
• Acquirer FYE - June 30
• Target FYE - December 31
• Acquirer expected EPS for FYE June 2014 is $2.40
• Target consensus EPS for FYE Dec 2013 is $1.12
• Target consensus EPS for FYE Dec 2014 is $1.78
Assuming 360 days in a year for simplicity, calculate target EPS adjusted to
acquirer FYE in the transaction year
(FYE June 2014) - ✔✔✔ANSWER-$1.45
• Acquirer purchases 100% of target by issuing additional stock to purchase target
shares
• No premium is offered to the current target share price
• Acquirer share price at announcement is $30
• Target share price at announcement is $50
• Acquirer EPS next year is $3.00
• Target EPS next year is $2.00
• Acquirer has 4 thousand shares outstanding
• Target has 2 thousand shares outstanding
Assuming a 40% tax rate, what are the necessary pre-tax synergies needed to
break-even? - ✔✔✔ANSWER-
• Acquirer purchases 100% of target by issuing additional stock to purchase target
shares
• No premium is offered to the current target share price
Premium Exam With
Latest Update
to calculate interest expense in the future, you should do which of the following -
✔✔✔ANSWER-apply a weighted average interest rate times the average debt
balance over the course of the year
Under recapitalization accounting - ✔✔✔ANSWER-The purchase price is
reflected as a reduction to equity
, Use the following information to answer the question below:
• Acquisition takes place on July 1, 2013
• Acquirer FYE - June 30
• Target FYE - December 31
• Acquirer expected EPS for FYE June 2014 is $2.40
• Target consensus EPS for FYE Dec 2013 is $1.12
• Target consensus EPS for FYE Dec 2014 is $1.78
Assuming 360 days in a year for simplicity, calculate target EPS adjusted to
acquirer FYE in the transaction year
(FYE June 2014) - ✔✔✔ANSWER-$1.45
• Acquirer purchases 100% of target by issuing additional stock to purchase target
shares
• No premium is offered to the current target share price
• Acquirer share price at announcement is $30
• Target share price at announcement is $50
• Acquirer EPS next year is $3.00
• Target EPS next year is $2.00
• Acquirer has 4 thousand shares outstanding
• Target has 2 thousand shares outstanding
Assuming a 40% tax rate, what are the necessary pre-tax synergies needed to
break-even? - ✔✔✔ANSWER-
• Acquirer purchases 100% of target by issuing additional stock to purchase target
shares
• No premium is offered to the current target share price
