Big Co. would like to buy Small Co. for a 30% control premium. Currently Big Co.s stock price is $43.21, its EPS is $2.64 and it has 89mm shares outstanding. Currently Small Co.s stock price is $50.00 (before premium), its EPS is $3.43 and it has 17.5mm shares outstanding. Big Co.s cost of debt is 6.5% and its tax rate is 30%.

4. If Big Co. uses stock to acquire Small Co. what would Big Co.s proforma EPS be?

A) $2.70.

B) $2.64.

C) $2.56.

D) $2.48.