Firm X Is Planning on Merging with Firm Y

question 84

Multiple Choice

Firm X is planning on merging with Firm Y. Firm X will pay Firm Y's stockholders the current value of their stock in shares of Firm X. Firm X currently has 3,900 shares of stock outstanding at a market price of $40 a share. Firm Y has 2,200 shares outstanding at a price of $17 a share. The after-merger earnings will be $7,800. What will the earnings per share be after the merger?

• A) $1.61
• B) $1.67
• C) $1.75
• D) $1.81
• E) $1.86

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Definitions:

Safety Deposit Box

A secure container, usually held within a vault in a bank, where valuable items and documents can be stored for protection.

Records Of Partnership

Documentation that details the agreements, contributions, profits, losses, and other essential information pertaining to the operation and governance of a partnership.

Articles Of Partnership

A legal document that outlines the rights, responsibilities, and obligations of each partner in a business partnership.

Voting Rights

The entitlements of individuals to participate in the election of their representatives and on other matters through the act of voting.