The Following Data on a Merger Are Given Firm a Has Proposed to Acquire Firm B at a l

question 3

Multiple Choice

The following data on a merger are given: $\begin{array} { l c l l } & \text { Firm A } & \text { Firm B}&\text { Firm AB } \\\text { Price per share } & \$ 100 & \$ 10 & \\\text { Total earnings } & \$ 500 & \$ 300 & \\\text { Shares outstanding } & 100 & 40 & \\\text { Total value } & \$ 10,000 & \$ 400 & \$ 11,000\end{array}$ Firm A has proposed to acquire Firm B at a price of $20 per share for Firm B's stock.What will earnings per share be for Firm A after the merger, assuming that cash is used in the acquisition?

• A)$6
• B)$7
• C)$8
• D)$5

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Definitions:

Coal

A combustible black or brownish-black sedimentary rock made largely of carbon and hydrocarbons, used as a fossil fuel for producing energy.

Natural Gas

A fossil fuel used primarily for heating, cooking, and electricity generation, consisting mainly of methane.

Energy Resources

Various sources of usable energy, such as fossil fuels, nuclear, solar, wind, and hydroelectric power, that can be utilized to produce power.

United States

A country in North America, comprising 50 states, a federal district, five major self-governing territories, and various possessions, noted for its diverse geography and cultural wealth.