-Company a Has a Growth Rate in EPS of 14

question 75

Multiple Choice

$$\begin{array} { l r r } &\underline{ \text { Company A }} &\underline{ \text { Company B }} \\\text { Total earnings } & \$ 2,000,000 & \$ 1,000,000 \\\text { Number of shares outstanding } & 400,000 & 100,000 \\\text { Earnings per share } & \$ 5.00 & \$ 10.00 \\\text { Price/earnings } & 6 \mathrm { X } & 3 \mathrm { X } \\\text { Market price/share } & 30.00 & \$ 30.00\end{array}$$
-Company A has a growth rate in EPS of 14%.Company B's growth rate in EPS is 10%.What is the post-merger growth rate assuming the facts as previously stated? (Assume no Synergy.)

• A) 13.20%
• B) 10.88%
• C) 12.00%
• D) 12.67%

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Definitions:

Self-Esteem

An individual's subjective evaluation of their own worthiness and personal value.

Fear of Death

An emotional state characterized by anxiety or dread associated with the awareness of mortality and the inevitable process of dying.

Terror Management Theory

A psychological concept proposing that fear of death drives individuals to adopt cultural values and beliefs that provide meaning, purpose, and a sense of immortality.

Self-Esteem

An individual's overall subjective assessment of their own worth or value.