Rearden Metal has earnings per share of $3.8. It has 8 million shares outstanding and is trading at $29 per share. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.98, 4 million shares outstanding, and a price per share of $17. Rearden Metal will pay for Associated Steel by issuing new shares. There are no expected synergies from the transaction.

If Rearden offers an exchange ratio such that, at current pre-announcement share prices for both

firms, the offer represents a 17% premium to buy Associated Steel, then Rearden's earnings per share after the merger will be closest to: