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Walalahai Inc. is being acquired by Walalahoi Inc. on a share exchange basis. Their selected data are as follows: Walalahoi Ksh. 5,600,000 1,000,000 Profits

Walalahai Inc. is being acquired by Walalahoi Inc. on a share exchange basis. Their selected data are as follows: Walalahoi Ksh. 5,600,000 1,000,000 Profits after tax Number of Shares Earnings per Share Price-Earnings Ratio 5.6 12.5 Walalahai Ksh.2,100,000 840,000 2.5 7.5 Determine: i. Pre-merger, market value per share ii. The maximum exchange ratio Walalahoi Inc should offer without dilution of a) the EPS, b) Market Value per share. (12 marks)

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