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

question 49

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) $1.85
• B) $1.90
• C) $2.00
• D) $2.25

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Definitions:

Performance Management Systems

A systematic approach to improving organizational performance by developing the performance of individuals and teams.

Internal and External Customers

Internal customers are employees or departments within the organization that rely on others within the organization, while external customers are individuals or entities outside the organization that consume its products or services.

Performance Measures

Indicators or metrics used to assess, track, and communicate the efficiency, effectiveness, or productivity of an individual, group, or organization.

High-performance Organization

An organization that consistently outperforms its peers in key metrics such as profitability, customer satisfaction, and employee retention.