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Consider the following premerger information about Firm A and Firm B: Firm A Firm B Total earnings $ 2,100 $ 750 Shares outstanding 900 300
Consider the following premerger information about Firm A and Firm B: |
Firm A | Firm B | |||||
Total earnings | $ | 2,100 | $ | 750 | ||
Shares outstanding | 900 | 300 | ||||
Price per share | $ | 60 | $ | 12 | ||
Assume that Firm A acquires Firm B via an exchange of stock at a price of $13 for each share of B's stock. Both A and B have no debt outstanding.
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