Yablonski Cordage Company is considering the acquisition of Yawitz Wire and Mesh Corporation with common stock. Relevant financial information is as follows: YABLONSKI Present earnings (in thousands) Common shares outstanding (in thousands) 2,000 Earnings per share $4,000 $2.00 YAWITZ 12 $1,000 800 $1.25 Price/earnings ratio Yablonski plans to offer a premium of 20 percent over the market price of Yawitz stock. a. What is the ratio of exchange of stock? How many new shares will be issued? b. What are earnings per share for the surviving company immediately following the merger? c. If the price/earnings ratio for Yablonski stays at 12, what is the market price per share of the surviving company? What would happen if the price/earnings ratio went to 11? 8