A national hardware chain | Business & Finance homework help
The next step is to divide this total intrinsic value by the number of outstanding shares (4 million) to arrive at a fair market value per share ($18.88). Lastly, we subtract any outstanding debt that needs to be repaid (5 million) from the total estimated valuation in order to get our desired maximum price per share ($13.88).
Therefore, based on these calculations, Dunbar should not offer more than $13.88 per share when attempting to purchase Eastern since anything above this amount would no longer provide an acceptable return on investment for their shareholders considering all relevant factors involved in this transaction.