a)
To calculate: The EPS (Earnings per Share) of Firm A after a merger
Introduction:
The EPSis the part of the profit of a firm that is allocated to every outstanding share of common stock. It indicates the profitability of the company.
b)
To calculate: The price per share for Firm A, if the ratio of price-earnings does not change.
Introduction:
The EPSis the part of the profit of a firm that is allocated to every outstanding share of common stock. It indicates the profitability of the company.
c)
To calculate: The price-earnings ratio after the merger, assuming that the market correctly analyzes the transaction.
Introduction:
The EPSis the part of the profit of a firm that is allocated to every outstanding share of common stock. It indicates the profitability of the company.
d)
To calculate: The share price of Firm A after the merger, and the price-earnings ratio.
Introduction:
The EPSis the part of the profit of a firm that is allocated to every outstanding share of common stock. It indicates the profitability of the company.
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- H4 You sell short 18 shares of Wells Fargo &Co that are currently selling at $54 per share. You post the 0.56 margin required on the short sale. If your broker requires a 0.37 maintenance margin (MMR), at what stock price will you get a margin call? (You earn no interest on the funds in your margin account, and the firm does not pay any dividends.)arrow_forwardH3. An unlevered firm with 300,000 shares outstanding has net income of $625,000. The firm’s stock sells for $9.50 per share and the book value per share is $12.00. The firm is considering an investment that is expected to cost $1 million and increase net income by $125,000. The cost of the investment will be financed with the issue of new shares. Assume the firm’s price-earnings ratio will remain constant. Does accounting dilution and/or market value dilution take place? Why? Show proper step by step calculationarrow_forwardelizabeth eaarns $9.50 a share, sells for $90, and pays a $6 per sharedeviden. the stock is split two for one and a $3 pers share cash dividend is diclared. what will be the new price of the stock? if the firms total earnings to do not change, what is the payout ratio before and after stock split?arrow_forward
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- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning