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Your company has earnings per share of S4. Thas 1 milion tharos outstanding, each of which has a price of 537 . You are thinking

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Your company has earnings per share of S4. Thas 1 milion tharos outstanding, each of which has a price of 537 . You are thinking of buying TargeiCe, which has earnings per share of \$3, 1 millon shares oustanding, and a price per share of \$23. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you ofler an axchange nato such that, at oument pre-amounoement ahve prices for both firms, the oflet represents a 15% premim to buy TargetCo. Assume that on the anhouncement the target price will go ip and your price wal go down to refect the fact that yeu are wiling lo pay a premium for TargetCo. Assume that the takeover wit occur with certainty and al market pariciparts know this on the announcement of the takeovec. a. What is the price per shace of the combined corperation inmed alely after the merger is compleled? b. What is the price of your company lmwedately afler the announcentent? c. What is the price of TargetCo immedately after the announcement? d. What is the actual preenim your company will pay? a. What ia the price per thare of the combined corporation immediasely afer eve meryer is compleled? The share srice wit tes 1 (Pound to the nearest cent.)

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