KMJ has $7 million in after-tax earnings, 2 million shares outstanding each priced at $24. KMJ is considering acquiring XLT. XLT has $1.7 million in after-tax earnings, 1.1 million shares outstanding each priced at $16. KMJ believes that the acquisition will yield $600,000 in immediate synergistic earnings. KMJ is planning to bid with an offer price of $19.

Determine the exchange ratio.

0.89

0.79

0.69

0.59

Determine EPS for the combined company.

$5.48

$4.32

$3.24

$2.78

Determine KMJs pre-merger EPS.

$3.5

$3

$2.5

$2