Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sun Industries has 14 million shares outstanding, with a share price of $21 and earnings per share of $3. Sun Industries is considering acquiring Rock

image text in transcribed
Sun Industries has 14 million shares outstanding, with a share price of $21 and earnings per share of $3. Sun Industries is considering acquiring Rock Networks. Rock Networks has 5.6 million shares outstanding, with a share price of $10.5 and earnings per share of $1.5. Sun Industries will pay for Rdakk Networks by issuing new shares. Sun Industries does not expect this transaction to bring synergies, and Sun Industries pays no premium to buy Rock Networks. The price-earnings ratio for Sun Industries after the merger will be closest to: Select one: a. 8.17 b. 3.50 c. 7.00 d. 6.00

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

School Finance Elections

Authors: Don E. Lifto, Bradford J. Senden, Daniel A. Domenech

2nd Edition

ISBN: 1607091488, 978-1607091486

More Books

Students also viewed these Finance questions