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Consider the following information for two all-equity firms, A and B: Firm A Firm B Total earnings $1,000 $400 Shares outstanding 100 80 Price per
Consider the following information for two all-equity firms, A and B:
| Firm A | Firm B |
Total earnings | $1,000 | $400 |
Shares outstanding | 100 | 80 |
Price per share | $80 | $30 |
Firm A is acquiring Firm B by exchanging 25 of its shares for all shares in B
16. What is the equivalent cash cost of the merger if the merged firm is worth $11,000?
____
- $2,000
- $2,200
- $2,400
- $2,800
17. What is Firm As new P/E ratio after merger?
____
A) 8.76
B) 8.00
C) 7.86
D) 6.78
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