Assume the following financial data for the Noble Corporation and Barnes Enterprises: Noble Corporation Barnes Enterprises Total earnings $1,820,000 $5,620,000 Number of shares of stock outstanding 650,000 2,810,000 Earnings per share $2.80 $2.00 Price-earnings ratio (P/E) 20 28 Market price per share . $56 $56

a. If all the shares of the Noble Corporation are exchanged for those of Barnes Enterprises on a share-for-share basis, what will postmerger earnings per share be for Barnes Enterprises? Use an approach similar to that in Table 20-3.

b. Explain why the earnings per share of Barnes Enterprises changed.

c. Can we necessarily assume that Barnes Enterprises is better off after the merger?