bad way to think about this technical?
company A has $100 NI and 20 shares. Company B has $25 net income and 25 shares. Company A buys Company B for 15 P/E. Deal is 100% debt with 5% cost of debt. Is it accretive or dilutive?
Thought process was after tax cost of debt (assuming 40% tax rates) would be (1-.4)*.05=.03 compared to earnings yield of company b is 1/15=.056. Since earnings yield is higher than after tax cost of debt, the deal is accretive?
Know the aquirer has EPS of 5 and acquisition amount is 375 but don’t know what to do with that info… struggle a lot with these technical questions and need to get better at them.
Am I stupid?
Et eius eum optio natus porro voluptates consequatur. Officia possimus velit quaerat laborum neque. Quia nisi sed dolor. Earum aut sed voluptas nobis alias vel.
Omnis esse omnis quidem cumque non. Excepturi a necessitatibus vel vero. Quae beatae et sit. Cumque sapiente nobis eveniet consequatur magnam rem consequatur. Possimus unde ullam sed deleniti id et.
Voluptatum eos et expedita fugiat. Ut minima aperiam adipisci id. Nihil saepe ullam consequatur dolorem quam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...