Prior to the Merger, Firm a Has $1,250 in Total

question 84

Multiple Choice

Prior to the merger, Firm A has $1,250 in total earnings with 750 shares outstanding at a market price per share of $42. Firm B has $740 in total earnings with 220 shares outstanding at $18 per share. Assume Firm A acquires Firm B via an exchange of stock at a price of $20 for each share of B's stock. Both A and B have no debt outstanding. What will the earnings per share of Firm A be after the merger?

• A) $2.10
• B) $1.86
• C) $1.95
• D) $2.02
• E) $2.33