Reference no: EM132493471

The shareholders of Jolie Company have voted in favor of a buyout offer from Pitt Corporation. Information about each firm is given here:

                                          Jolie                     Pitt

Price-earnings ratio         13.2                   37

Shares outstanding         99,000              370,000

Earnings                       $230,000            $920,000

• Jolie's shareholders will receive one share of Pitt stock for every three shares they hold in Jolie.

Question 1: What will the EPS of Pitt be after the merger? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

Question 2: What will the PE ratio be if the NPV of the acquisition is zero? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Question 3: What must Pitt feel is the value of the synergy between these two firms?