Expected

EPSMerger

decisionGraham & Sons wishes to evaluate a proposed merger into the RCN Group. Graham had

2019

earnings of

$150,000,

has

100,000

shares of common stock outstanding, and expects earnings to grow at an annual rate of

7%.

RCN had

2019

earnings of

$800,000,

has

200,000

shares of common stock outstanding, and expects its earnings to grow at

3%

per year.

b.What would Graham's stockholders earn in each of the next 5 years

(2020-2024)

on each of their Graham shares swapped for RCN shares at a ratio of

0.5

share of RCN for 1 share of Graham?

ex: The expected post-merger EPS in year

2021

for Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is

$. (round to nearest cent)