The Following Data on a Merger Are Given

question 9

Multiple Choice

The following data on a merger are given:

Firm A has proposed to acquire Firm B at a price of $20 per share for Firm B's stock. Calculate the postmerger P/E ratio, assuming that cash is used in the acquisition and the merger has no immediate effect on total firm income.

• A)12.75
• B)6.25
• C)13.75
• D)17.85

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Definitions:

Durkheim

Refers to Emile Durkheim, a foundational sociologist who introduced concepts such as social facts, collective conscience, and anomie in the study of societal norms and structures.

Collective Social Forces

The combined influence of societal institutions, structures, and processes that shape individual and group behavior.

Culture

The shared values, beliefs, norms, customs, arts, history, and behaviors of a group of people that define their societal way of life.

Enlightenment

A historical period and intellectual movement in the 17th and 18th centuries emphasizing reason, individualism, and skepticism of traditional doctrines.