Alpha Is Planning on Merging with Beta

question 89

Multiple Choice

Alpha is planning on merging with Beta.Alpha will pay Beta's shareholders the current value of their stock in shares of Alpha.Alpha currently has 4,200 shares of stock outstanding at a market price of $40 a share.Beta has 2,500 shares outstanding at a price of $18 a share.The after-merger earnings will be $8,800.What will the earnings per share be after the merger?

• A)$1.61
• B)$1.65
• C)$1.75
• D)$1.81
• E)$1.86

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Definitions:

Depreciation

The process of allocating the cost of tangible assets over their useful lives, reflecting the decrease in their value over time.

Intangible Asset

An asset that lacks physical substance but is identifiable and provides economic benefits to the entity, such as patents, trademarks, and copyrights.

Fixed Asset

Long-term tangible property used in the operation of a business and not expected to be consumed or converted into cash in the near term.

Treasury Note

A medium-term government debt security with fixed interest rates and maturities typically between one and ten years.