Q#1: A merger between Minnie Corporation and Mickey Corporation is under consideration. The

financial information for these firms is as follows:

a) On a share-for-share exchange basis, what will the postmerger earnings per share be?

b) If Mickey Corporation pays a 25 percent premium over the market value of Minnie Corporation,

how many shares will be issued?

c) With the 25 percent premium, what will the postmerger earnings per share be?

d) Assume a 100 percent premium will be paid and there is a 25 percent synergistic benefit to total

earnings from the merger. Will the postmerger earnings go up or down based on your

calculations?