**Answer questions; D, E, and F.

The Jeter Corporation is considering acquiring the A-Rod Corporation. The data for the two companies are as follows:

	A-Rod Corp.			Jeter Corp.
Total earnings		$756,000			$4,300,000
Number of shares of stock outstanding		315,000			2,150,000
Earnings per share		$2.40			$2.00
Price-earnings ratio (P/E)		15			18
Market price per share		$36			$36

a. The Jeter Corp. is going to give A-Rod Corp. a 50 percent premium over A-Rods current market value. What price will it pay? (Do not round intermediate calculations and round your answer to the nearest whole number.)

= $54.00

b. At the price computed in part a, what is the total market value of A-Rod Corp.? (Use the number of A-Rod Corp. shares times price.) (Do not round intermediate calculations and round your answer to the nearest whole number.)

= $17,010,000

c. At the price computed in part a, what is the P/E ratio Jeter Corp. is assigning A-Rod Corp? (Do not round intermediate calculations and round your answer to 2 decimal places.)

P/E Ratio = 22.50 times

d. How many shares must Jeter Corp. issue to buy the A-Rod Corp. at the total value computed in part b? (Do not round intermediate calculations and round your answer to the nearest whole number.)

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e. Given the answer to part d, how many shares will Jeter Corp. have after the merger? (Do not round intermediate calculations and round your answer to the nearest whole number.)

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f. What are the new postmerger earnings per share? (Do not round intermediate calculations and round your answer to 2 decimal places.)

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