World Enterprises is determined to report earnings per share of $2.75. It therefore acquires the Wheelrim and Axle Company. You are given the following facts:

World Enterprises Wheelrim and Axle Merged Firm Earnings per share $ 2.20

$ 2.30

$2.75 Price per share $ 44.00

$ 23.00

? Priceearnings ratio

20

10

? Number of shares

140,000

160,000

? Total earnings $ 308,000

$ 368,000

? Total market value $ 6,160,000

$ 3,680,000

?

There are no gains from merging. In exchange for Wheelrim and Axle shares, World Enterprises issues just enough of its own shares to ensure its $2.75 earnings per share objective. Required:

Complete the below table for the merged firm. How many shares of World Enterprises are exchanged for each share of Wheelrim and Axle? What is the cost of the merger to World Enterprises? What is the change in the total market value of the World Enterprises shares that were outstanding before the merger?

Complete the below table for the merged firm. (Do not round intermediate calculations. Round "Price per share" to 2 decimal places, "Price-earnings ratio" to 1 decimal place, and the other final answers to the nearest whole number.)

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A)

World Enterprises Wheelrim and Axle Merged Firm Earnings per share $2.20 $2.30 $2.75 Price per share $44 $23.00 Priceearnings ratio 20 10 Number of shares 140,000 160,000 Total earnings $308,000 $368,000 Total market value $6,160,000 $3,680,000

C) What is the cost of the merger to World Enterprises? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest whole number.)

B)

How many shares of World Enterprises are exchanged for each share of Wheelrim and Axle? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Exchange ratio

D) What is the change in the total market value of the World Enterprises shares that were outstanding before the merger? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.)

Change in share value