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Intro Big Scope Inc. has 6 million shares outstanding, a share price of $105 and earnings per share of $5. The company wants to buy
Intro Big Scope Inc. has 6 million shares outstanding, a share price of $105 and earnings per share of $5. The company wants to buy Little Scope Inc., which has 4 million shares outstanding, a share price of $24 and earnings per share of $2. Big Scope is going to pay for the acquisition by issuing new shares, and there are no transactions costs or expected synergies. Part 1 Attempt 1/10 for 10 pts. How many new shares must Big Scope issue to pay for the takeover if there's no acquisition premium (in million)? Part 2 Attempt 1/10 for 10 pts. What will be earnings per share after the merger if there is no acquisition premium? Part 3 Attempt 1/10 for 10 pts. What is the change in the P/E ratio of Big Scope (value, not percent)
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