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:

Myers-Briggs Type Indicator

A personality assessment tool that categorizes individuals into 16 distinct personality types based on preferences in how they perceive the world and make decisions.

Sensing Vs. Intuitive

A dichotomy in personality typologies that contrasts the preference for dealing with concrete, observable facts (Sensing) versus abstract, conceptual information (Intuitive).

Self-Monitoring

The degree to which someone is able to adjust behaviour in response to external factors.

Predictable

Something that can be expected or anticipated based on certain signs, patterns, or behaviors.