=+LG 3 ST18–2 Expected EPS: Merger decision At the end of 2016, Lake Industries had 80,000 shares of common stock outstanding and had earnings available for common shareholders of $160,000. Butler Company, at the end of 2016, had 10,000 shares of common stock outstanding and had earned $20,000 for common shareholders.

Lake’s earnings are expected to grow at an annual rate of 5%, and Butler’s growth rate in earnings should be 10% per year.