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Determine the number of shares

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Question - Company A has purchased Company B in the current year. Company B had its base year earnings of $300000.00 At the time of merger its shareholders received initial payment of $75000.00 shares of Company A. The market value of the Company A's share is $30.00 per share and the P/E ratio is 8.Projected post merger earnings of Company B for next three years are $330000.00 , $390000.00 & $414000.00 Assuming no changes in share prices and P/E ratio of Company A, determine the number of shares required to be issued to the shareholders of Company B during these years.

Reference no: EM132174239

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