A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows:

	Minnie Corporation		Mickey Corporation
Total earnings		$960,000		$1,920,000
Number of shares of stock outstanding		240,000		960,000
Earnings per share		$4.00		$2
Price-earnings ratio (P/E)		10X		20X
Market price per share		$40		$40

a. Assume a 100 percent premium will be paid and there is a 40 percent synergistic benefit to total earnings from the merger. What is the change in Mickey Corporation's earnings if it merges with Minnie Corporation? (Round the final answer to 2 decimal places.)

Change in earnings per share post merger $ 2.8 Numeric ResponseEdit Unavailable. 2.8 incorrect.

b. Will the postmerger earnings go up or down?

multiple choice

• Up

• Down