Firm a is acquiring firm b by exchanging 100 of its shares

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Reference no: EM13483920

Consider the following information for two all equity firms, A and B:


Firm A

Firm B

Total earnings

$3,000

$1,100

Shares outstanding

600

400

Price per share

$ 70

$ 15

Firm A is acquiring Firm B by exchanging 100 of its shares for all the shares in B. What is the cost of the merger if the merged firm is worth $63,000? What will happen to Firm A's EPS? Its PE ratio?

Reference no: EM13483920

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