Chartered Financial Analyst Level 2
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32 Company X is evaluating the takeover of Company Y. The CFO of Company X analyzes the following data of three comparable companies that were recently acquired. Amounts are in $ per share.
| Company 1 | Company 2 | Company 3 | |
|---|---|---|---|
| EPS | 2.50 | 1.60 | 3.20 |
| Pre-acquisition price | 17 | 12 | 28 |
| Takeover price | 21 | 16 | 36 |
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A
Question appears incomplete - missing actual question and answer choices
B
Explanation:
Note: This question appears to be incomplete in the provided text. It shows the data table but does not provide the actual question or answer choices. To properly analyze this question, we would need:
- The complete question text asking what is being calculated or determined
- The answer choices (A, B, C, etc.)
- The correct answer
Based on the data provided, we can calculate:
- Pre-acquisition P/E ratios:
- Company 1: 17/2.50 = 6.8x
- Company 2: 12/1.60 = 7.5x
- Company 3: 28/3.20 = 8.75x
- Takeover P/E ratios:
- Company 1: 21/2.50 = 8.4x
- Company 2: 16/1.60 = 10.0x
- Company 3: 36/3.20 = 11.25x
- Takeover premiums:
- Company 1: (21-17)/17 = 23.5%
- Company 2: (16-12)/12 = 33.3%
- Company 3: (36-28)/28 = 28.6%
Without the complete question and answer choices, I cannot provide a definitive answer or explanation.
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