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Consider the following premerger information about Firm A and Firm B: Assume that Firm A acquires Firm B via an exchange of stock at a
Consider the following premerger information about Firm A and Firm B: Assume that Firm A acquires Firm B via an exchange of stock at a price of $37 for each share of B's stock. Both A and B have no debt outstanding. a. What will the earnings per share, EPS, of Firm A be after the merger? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What will Firm A's price per share be after the merger if the market incorrectly b. analyzes this reported earnings growth (that is, the price-earnings ratio does not change)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What will the price-earnings ratio of the postmerger firm be if the market correctly c. analyzes the transaction? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) If there are no synergy gains, what will the share price of A be after the merger? (Do d-1. not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d-2. If there are no synergy gains, what will the price-earnings ratio be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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