The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation. Information about each firm is given here: Flannery Stultz Price-earnings ratio 13.2 34 Shares outstanding 99,000 340,000 Earnings $200,000 $800,000 Flannerys shareholders will receive one share of Stultz stock for every three shares they hold in Flannery.

a-1. What will the EPS of Stultz be after the merger?

a-2. What will the PE ratio be if the NPV of the acquisition is zero?

b. What must Stultz feel is the value of the synergy between these two firms?