5. (20%) World Enterprises is determined to report earnings per share of $2.67, and therefore acquires the Wheelrim and Axle Company. You are given the following facts: Merged Firm S2.67 Wheelrim and Axle $2.50 $25 10 200,000 $500,000 $5,000,000 World Enterprises $2.00 $40 Earnings per share Price per share Price-earnings ratio 20 Number of shares Total earnings Total market value 100,000 $200,000 $4,000,000 There are no gains from merging. In exchange for Wheelrim and Axle shares, World Enterprises issues just enough of is own shares to ensure its $2,67 eamings per share objective. a. Complete the above table for the merged firm. b. How many shares of World Enterprises are exchanged for each share of Wheelrim and Axle? c. What is the cost of the merger to World Enterprises? d. What is the change in the total market value of the World Enterprises shares that were outstanding before the merger? 6(2090) Examine a hostile acquisition and discuss the tactics employed by both the predator and the target companies. How do you think mergers should be regulated? For example, for the above mentioned tactics and defense strategies should target companies be allowed to employ? Should managers of target firms be compelled to seek out the highest bids? Should they simply be passive and watch from the sidelines