Expected EPSMerger decisionGraham & Sons wishes to evaluate a proposed merger into the RCN Group. Graham had 2019 earnings of $200,000, has 100,000 shares of common stock outstanding, and expects earnings to grow at an annual rate of 7%. RCN had 2019 earnings of $700,000, has 200,000 shares of common stock outstanding, and expects its earnings to grow at 3% per year.

a.Calculate the expected earnings per share (EPS) for Graham & Sons for each of the next 5 years (2020-2024) without the merger.

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 0.8 shares of RCN for 1 share