Question
Ratio of exchange and EPSMarla's Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table.
Ratio of exchange and EPSMarla's Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Item | Marla's Cafe | Victory Club |
| ||
Earnings available for common stock | $50,000 | $6,500 | |||
Number of shares of common stock outstanding | 40,000 | 5,000 | |||
Market price per share | $17 | $23 |
Marla's Cafe has sufficient authorized but unissued shares to carry out the proposed merger. If the ratio of exchange is 1.8, what will be the earnings per share (EPS) based on the original shares of each firm?
The EPS for Marla's original shareholders after the merger is $_____? (Round to three decimal places.)
The EPS for Victory's original shareholders after the merger is $_____? (Round to three decimal places.)
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