1.Rearden Metal has current earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Rearden Metal is thinking of buying Associated Steelthrough stock payment (so), which hascurrentearnings per share of $1.25, 4 million shares outstanding, and stock price per share of $15. Rearden Metal will pay for Associated Steel by issuing new shares. There are no expected economic synergies from the transaction.

(a)If Rearden pays no premium to buy Associated Steel, what is Reardens EPS immediately after the acquisition?(b)If Rearden offers an exchange ratio such that, at current pre-announcement share prices for both firms, the offer represents a 20% premium to buy Associated Steel, what is Reardens EPS immediately after the acquisition?