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The Jeter Corporation is considering acquiring the A-Rod Corporation. The data for the two companies are as follows: Total earnings Number of shares of stock
The Jeter Corporation is considering acquiring the A-Rod Corporation. The data for the two companies are as follows: Total earnings Number of shares of stock outstanding Earnings per share Price-earnings ratio (P/E) Market price per share A-Rod Corp. $ 495,000 225, eee $ 2.20 20 $ 44 Jeter Corp. $2,500,000 1,250, eee $ 2.00 22 $ 44 a. The Jeter Corp. is going to give A-Rod Corp. a 50 percent premium over A-Rod's current market value. What price will it pay? (Do not round Intermediate calculations and round your answer to the nearest whole number.) Price b. At the price computed in part a, what is the total market value of A-Rod Corp.? (Use the number of A-Rod Corp. shares times price.) (Do not round intermediate calculations and round your answer to the nearest whole number.) Market value c. At the price computed In part a, what is the P/E ratio Jeter Corp. is assigning A-Rod Corp? (Do not round intermediate calculations and round your answer to 2 decimal places.) PE ratio times d. How many shares must Jeter Corp. issue to buy the A-Rod Corp. at the total value computed in part b? (Do not round intermediate calculations and round your answer to the nearest whole number.) New shares e. Given the answer to part d, how many shares will Jeter Corp. have after the merger? (Do not round intermediate calculations and round your answer to the nearest whole number.) Total shares f. What are the new postmerger earnings per share? (Do not round intermediate calculations and round your answer to 2 decimal places.) New postmerger EPS
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