Question #60

Reading: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples

PDF File: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples.pdf

Page: 21

Status: Correct

Correct Answer: A

Part of Context Group: Q60-62 First in Group
Shared Context
- Bernheim's investment bankers have determined the value of Country Point to be $162.6 million. As part of the spin-off, Beachwood issued to its common shareholders two shares in Country Point for each Beachwood share that its current shareholders held. The appropriate initial offering price per share of the shares that Beachwood's shareholders receive is closest to: A) $16.26. B) $32.50. C) $14.45.
Question
Immediately after the spin-off, Country Point's book value per share is closest to:
Answer Choices:
A. $16.25
B. $5.56
C. $11.12
Explanation
The allocated common equity or book value of Country Point was $55.6 million at year-end 2013 and 10 million shares were allocated for the spin-off. The book value would be $55.6 million / 10 million = $5.56 per share.
Actions
Practice Flashcards