Problem 21-5 Mergers and P/E Ratios (LO]) Castles in the Sand currently selis at a price-earnings multple of 20 The firm has 2 million shares outstanding and sells at a price per share of $40 Firm Foundation has a P/E multiple of 10 , has 1 million shares outstanding, and sells at a price per share or $20 a. If Castles acquires the other firm by exchanging one ofits shares for every two of Firm Foundation, what will be the earnings per share of the merged firm? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What will be the price per share for Castle? Note: Do not round intermediate calculations. c. What would be Firm. Foundebon's value of stock post merge? Note: Do not round intermediate calculations. Enter your answer in millions. d. What should be the P/E of the new firm if the merger has no economic gains? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. e. Calculate Castles' price per share if the market does not realize that the P/E rotio of the merged firm ought to differ from Castles' premerger rotio Note: Do not round intermediate calculations. f. How are the gains from the merger split between shoreholders of the two firms if the market is fooled as in part (e)? Note: Enter your answers in millions