Question
World Enterprises is determined to report earnings per share of $2.07. It therefore acquires the Wheelrim and Axle Company. You are given the following facts:
World Enterprises is determined to report earnings per share of $2.07. It therefore acquires the Wheelrim and Axle Company. You are given the following facts:
| World Enterprises | Wheelrim and Axle | Merged Firm | |||||||||
| Earnings per share | $ | 1.55 | $ | 2.65 | $2.07 | ||||||
| Price per share | $ | 31.00 | $ | 26.50 | ? | ||||||
| Priceearnings ratio | 20 | 10 | ? | ||||||||
| Number of shares | 120,000 | 190,000 | ? | ||||||||
| Total earnings | $ | 186,000 | $ | 503,500 | ? | ||||||
| Total market value | $ | 3,720,000 | $ | 5,035,000 | ? | ||||||
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 $2.07 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?
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Ripple The Ultimate Guide To The World Of Ripple
Authors: Ikuya Takashima
1st Edition
1986181618, 978-1986181617
