finance-Connect Total Earnings Shares Outstanding Price per Share

QUESTION

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Connect
Firm A
Firm B

Total Earnings
$ 1,700.00
$ 1,200.00

Shares Outstanding
900
250

Price per Share
$ 35.00
$ 39.00

A exchange for B
$ 41.00

NO DEBT

EPS

Cost
$ 10,250.00

Shares offered
292.86

A
EPS
$ 2.43

B
Original P/E
$ 18.53

Price
$ 45.05

C
New P/E
14.40

D1
New Shar Price
$ 34.58

D2
P/E
14.22

D3
NPV Negative too high
(0.17)

ANSWER:

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