Please answer all of the following:

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 percentage of dilution (percentage decrease) in KMJs EPS as a result of the acquisition.

-1.17%

-2.98%

-5.47%

-7.43%

Determine KMJs P/E ratio.

5.47

6.86

7.26

8.95

Determine XLTs EPS.

$3.55

$2.55

$1.55

$0.55

Determine the offer price at which KMJ does not experience EPS dilution after the acquisition.

$10.64

$8.58

$6.32

$5.77