7. Merger motives (S32.3) The Muck and Slurry merger has fallen through (see Section 32-3). But World Enterprises is determined to report earnings per share of $2.67. It therefore acquires the Wheelrim and Axle Company. You are given the following facts:

World Enterprises Wheelrim and Axle Merged Firm Earnings per share $2.00 $2.50 $2.67 Price per share $40 $25 ?

Price–earnings ratio 20 10 ?

Number of shares 100,000 200,000 ?

Total earnings $200,000 $500,000 ?

Total market value $4,000,000 $5,000,000 ?

Once again, there are no gains from merging. In exchange for Wheelrim and Axle shares, World Enterprises issues just enough of its own shares to ensure its $2.67 earnings per share objective.

a. Complete the table for the merged firm.