Shelby Computing is in negotiations with Ponting Consulting. Currently, Shelby Computing is considering swapping 0.6 shares of Shelby Computing for each share of Ponting Consulting. Shelby Computing has sufficient authorized but unissued shares to carry out the proposed merger. Additional financial data are summarized in the following table.

a. How many new shares of stock will Shelby Computing have to issue to make the proposed merger?
b. If the earnings for each firm remain unchanged, what will be the post-merger earnings per share?
c. How much, effectively, has been earned on behalf of each of the original shares of Ponting Consulting’s stock?
d. How much, effectively, has been earned on behalf of each of the original sharesof Shelby Computing’s stock?

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Item Earnings available for common stock Number of shares of common stock Earnings per share (EPS) Market price per share Price/earnings (P/E) ratio Shelby Computing Ponting Consulting $1,000,000 120,000 $8.33 $20.75 $2.49 $2,200,000 200,000 $11.00 $52.50 $4.77