Companies A and B are valued as follows:

A B Number of shares 2,000 1,000 Earnings per share $10 $10 Share price $100 $50 Company A acquires B by offering one (new) share of A for every two shares of B (that is, after the merger, there are 2500 shares of A outstanding). If investors are aware that there are no economic gains from the merger, what is the price-earnings ratio of A's stock after the merger?

Companies A and B are valued as follows:

A B Number of shares 2,000 1,000 Earnings per share $10 $10 Share price $100 $50 Company A acquires B by offering one (new) share of A for every two shares of B (that is, after the merger, there are 2500 shares of A outstanding). If investors are aware that there are no economic gains from the merger, what is the price-earnings ratio of A's stock after the merger?

5.0

7.5

8.3

10.0