Use the Information for the Question(s)below

question 27

Essay

Use the information for the question(s)below.
Martin Manufacturing has earnings per share (EPS)of $3.00,5 million shares outstanding,and a share price of $32.Martin is considering buying Luther Industries,which has earnings per share of $2.50,2 million shares outstanding,and a share price of $20.Martin will pay for Luther by issuing new shares.There are no expected synergies from the transaction.
-If Martin pays no premium to acquire Luther,what will the earnings per share be after the merger?

Gain an understanding of bond valuation, including factors that affect the price of bonds and their yield.

Develop skills to calculate the present value of future income streams and the net present value (NPV) of investments.

Comprehend the relationship between interest rates and bond prices, including the impact of changes in interest rates.

Understand the basics of investment decisions, including the calculation and interpretation of the internal rate of return (IRR).

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Definitions:

Interest Rate Parity

A theory which suggests that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.

Approximation Formula

A mathematical equation or expression used to estimate a value or to simplify calculations.