Castles in the Sand currently sells at a price-earnings multiple of 10. The firm has 2 million shares outstanding and sells at a price per share of $40. Firm Foundation has a P/E multiple of 8, has 1 million shares outstanding, and sells at a price per share of $20.

a.	If Castles acquires the other firm by exchanging one of its shares for every two of Firm Foundation, what will be the earnings per share of the merged firm? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Earnings per share

$

b.	What will happen to Castles