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Use the Following Information to Answer the Question(s)below

question 54

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Use the following information to answer the question(s) below.
Rearden Metal has earnings per share of $2.It has 10 million shares outstanding and is trading at $20 per share.Rearden Metal is thinking of buying Associated Steel,which has earnings per share of $1.25,4 million shares outstanding,and a price per share of $15.Rearden Metal will pay for Associated Steel by issuing new shares.There are no expected synergies from the transaction.
-If Rearden pays no premium to buy Associated Steel,then Rearden's price-earnings ratio after the merger will be closest to:

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Definitions:

Price of Whey

The market cost for whey, a byproduct of cheese production, which is used in various food products and as an animal feed.

Income

Regular remuneration derived from employment or the engagement in investment ventures.

Indifference Curves

Graphical representations of combinations of two goods between which a consumer is indifferent, showcasing the consumer's preferences.

Price of X

The specific cost associated with purchasing a particular good or service, referred to as "X."

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