Q4. World Enterprises is determined to report earnings per share of $2.80. It therefore acquires the Wheelrim and Axle Company. There are no gains from merging. In exchange for Wheelrim and Axle shares, World Enterprises issues just enough of its own shares to ensure its $2.80 earnings per share objective.

Complete the table below for the merged firm. (Do not round intermediate calculations. Round "Price per share" and "Price-earnings ratio" to 2 decimal places and other answers to the nearest whole number.) (2 Marks) (Ch 21)

	World Enterprises	Wheelrim and Axle	Merged Firm
Earnings per share	$2.00	$2.50	$2.80
Price per share	$40	$20
Price-earnings ratio	20	8
Number of shares	110,000	220,000
Total earnings	$220,000	$550,000
Total market value	$4,400,000	$4,400,000

How many shares of World Enterprises are exchanged for each share of Wheelrim and Axle?

(1 Mark) (Ch 21)

What is the cost of the merger to World Enterprises? (1 Mark) (Ch 21)

What is the change in the total value of the World Enterprises shares that were outstanding before the merger? (1 Mark) (Ch 21)