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

question 17

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 offers an exchange ratio such that,at current pre-announcement share prices for both firms,the offer represents a 20% premium to buy Associated Steel,then the price per share of the combined corporation after the merger will be closest to:

• A)$19.12.
• B)$20.00.
• C)$26.00.
• D)$17.20.

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Definitions:

Self-Regulation

The ability to manage one's thoughts, emotions, and behaviors in accordance with long-term goals.

Longitudinal Study

A research design that involves repeated observations of the same variables (such as people) over short or long periods of time.

Intellectual Abilities

The capacity for logical, rational thought, as well as problem solving and learning.

Early Adulthood

A life stage typically ranging from the late teens or early twenties until the thirties, characterized by the pursuit of independence, career development, and, for many, starting a family.