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Consider the following for two firms that have only equity financed, firm A and firm B: Total Earnings Shares outstanding Price per share Firm A

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Consider the following for two firms that have only equity financed, firm A and firm B: Total Earnings Shares outstanding Price per share Firm A $3,000 600 $70 Firm B $1,000 400 $15 Firm A is acquiring Firm B by exchanging 100 of its shares for all the shares in B. What is the cost of the merger if the merged firm is worth $63,000? What will happen to Firm A's EPS? Its PE ratio

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