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?

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Definitions:

Finished Products

Goods that have completed the manufacturing process and are ready to be sold to customers.

Direct Materials Used

The raw materials directly traceable to the production of goods, considered part of the cost of goods sold.

Direct Labor

The expense associated with paying workers who directly contribute to manufacturing products or delivering services.

Manufacturing Overhead

Indirect factory-related costs that are not directly tied to the production of a specific product, such as the cost of maintaining factory equipment.