Use the Following Information to Answer the Question(s)below

question 43

Multiple Choice

Use the following information to answer the question(s) below.
Rearden Metal has earnings per share of $2.It has 10 million shares outstanding and is trading at $20 per share.Rearden Metal is thinking of buying Associated Steel,which has earnings per share of $1.25,4 million shares outstanding,and a price per share of $15.Rearden Metal will pay for Associated Steel by issuing new shares.There are no expected synergies from the transaction.
-If Rearden pays no premium to buy Associated Steel,then Rearden's earnings per share after the merger will be closest to:

• A)10
• B)10.42
• C)12
• D)7.8

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Definitions:

Analogy

A cognitive process of comparing two things based on their similarity in some respects, often used to explain concepts or ideas.

Comprehending

The cognitive process of understanding or making sense of texts, symbols, or situations.

Decision Making

The process(es) by which an individual selects one course of action from among alternatives.

Problem Solving

The process of finding solutions to difficult or complex issues.