Use the Information for the Question(s)below

question 30

Essay

Use the information for the question(s)below.
Martin Manufacturing has earnings per share (EPS)of $3.00,5 million shares outstanding,and a share price of $32.Martin is considering buying Luther Industries,which has earnings per share of $2.50,2 million shares outstanding,and a share price of $20.Martin will pay for Luther by issuing new shares.There are no expected synergies from the transaction.
-Assume that Martin pays no premium to acquire Luther.Calculate Martin's price-earnings (P/E)ratio both pre- and post-merger.

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Definitions:

Slope

A measure of the steepness, incline, or grade of a line, indicating the ratio of the vertical change to the horizontal change between two points on the line.

90th Percentile

A value below which 90% of the data points in a dataset fall.

Yearly Donations

The total sum of money given by donors to an organization within a year.

Thousands of Dollars

A unit of measure indicating the amount in multiples of one thousand dollars, often used to simplify financial figures.