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

question 41

Multiple Choice

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 offers an exchange ratio such that,at current pre-announcement share prices for both firms,the offer represents a 20% premium to buy Associated Steel,then Rearden's earnings per share after the merger will be closest to:

• A)$1.84.
• B)$1.90.
• C)$2.00.
• D)$2.25.

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Definitions:

Psychologically Significant Stimulus

Refers to any event or object that has a notable impact on an individual's psychological state or behavior.

Psychosocial Variables

Psychological and social factors that influence an individual's mental health and behavior.

Autonomic Nervous System

The part of the nervous system that controls involuntary bodily functions, including heart rate, digestion, respiratory rate, pupillary response, urination, and sexual arousal.

Somatic Nervous System

The part of the peripheral nervous system associated with voluntary control of body movements via skeletal muscles.