. To determine the cost of acquisition:

Highlands Ltd. currently has an earnings per share (EPS) of US 2.00 but is determined to report an EPS of US 2.67 and therefore acquires Olympia Ltd. The relevant acquisition information is provided below:

	Highlands Ltd.	Olympia Ltd.
Earnings per share (EPS)	Sh. 2.00	Sh. 2.50
Market price per share (MPS)	Sh. 40	Sh. 25
Price to earnings (P/E) ratio	20	10
Number of shares	100,000	200,000
Total earnings	Sh. 200,000	Sh. 500,000
Total market value	Sh. 4,000,000	Sh. 5,000,000

Required:

i. Compute the cost of the merger to Highlands Ltd.