World Enterprises is determined to report earnings per share of $2.67. It therefore acquires the Wheelrim and Axle Company. You are given the following facts: World Enterprises $ $ Wheelrim and Axle $ $ Merged Firm $2.67 Earnings per share Price per share Price-earnings ratio Number of shares 2.00 2.50 25 40 20 10 100,000 $ 200,000 $4,000,000 200,000 $ 500,000 $ 5,000,000 ? Total earnings Total market value There are no gains from merging. In exchange for Wheelrim and Axle shares, World Enterprises issues just enough its own shares to ensure its $2.67 earnings per share objective a. Complete the below table for the merged firm. (Do not round intermediate calculations. Round the price per share to 2 decimal places, the price-earnings ratio to 1 decimal place, and the other answers to the nearest whole number.) World Wheelrim and Axle $ $ Merged Fir $2.67 Enterprises $ $ Earnings per share Price per share 2.00 2.50 40 25 34.33 12.86 Price-earnings ratio 20 10 Number of shares 100,000 200,000 262172 $ 200,000 $ 500,000 Total earnings 700000 Total market value $ 4,000,000 $5,000,000 9000000 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 81 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.) Cost of merger $ 567,365 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.) $ 567,365 Change in share value World Enterprises is determined to report earnings per share of $2.67. It therefore acquires the Wheelrim and Axle Company. You are given the following facts: World Enterprises $ $ Wheelrim and Axle $ $ Merged Firm $2.67 Earnings per share Price per share Price-earnings ratio Number of shares 2.00 2.50 25 40 20 10 100,000 $ 200,000 $4,000,000 200,000 $ 500,000 $ 5,000,000 ? Total earnings Total market value There are no gains from merging. In exchange for Wheelrim and Axle shares, World Enterprises issues just enough its own shares to ensure its $2.67 earnings per share objective a. Complete the below table for the merged firm. (Do not round intermediate calculations. Round the price per share to 2 decimal places, the price-earnings ratio to 1 decimal place, and the other answers to the nearest whole number.) World Wheelrim and Axle $ $ Merged Fir $2.67 Enterprises $ $ Earnings per share Price per share 2.00 2.50 40 25 34.33 12.86 Price-earnings ratio 20 10 Number of shares 100,000 200,000 262172 $ 200,000 $ 500,000 Total earnings 700000 Total market value $ 4,000,000 $5,000,000 9000000 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 81 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.) Cost of merger $ 567,365 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.) $ 567,365 Change in share value
