Given below is the financial data of two companies Company A and Company B. Company A is acquiring Company B, by exchanging its shares on a one - to- one basis for Company B. The exchange ratio is based on the market prices of the shares of the two companies.

Financial data Company A Company B

Earnings after

Taxes (Rs) 10 00 000 7 00 000

Equity shares

outstanding (Number) 4 00 000 2 00000

Earnings per share (Rs) 2.50 3.50

Price Earnings Ratio (P/E) 14 10

Market price per Ratio (Rs) 35 35

You are required to calculate the following after Acquisition / Merger:

i) EPS (Post Merger)

ii) Change in EPS for the shareholders of the companies A and B

iii) Market value of the firm, post- merger (Assuming that P/E ratio of the company

A; remains unchanged)

iv) Profit accruing to shareholders of both the firms