2. Essex Industries is considering the acquisition of Twinsburg Company in a stock-for-stock exchange. The following financial data is available on both companies.

   (Assume no synergy is expected with this merger.) Calculate answers to nearest 0.001.

What is Essex post-merger share price if the post-merger price/earnings ratio 7:5 and the exchange rate is 0.4?

Assume total post-merger earnings are $43,740.00

Essex Twinsburg Sales $500 million $50 million Net income $40 million $3.74 million Common shares outstanding 5 million 1 million Earnings per share $8.00 $3.74 Dividends per share $3.00 $1.00 Common stock market price $64 $24 Price/earnings ratio 8 6.42