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

question 46

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 Rearden immediately after the announcement will be closest to:

• A)$15.00.
• B)$17.20.
• C)$18.60.
• D)$19.10.

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Definitions:

Voltage-Gated Channel

A type of protein channel in cell membranes that opens or closes in response to changes in electrical membrane potential.

Synaptic Vesicle

Secretory vesicle in the presynaptic terminal containing neurotransmitter substances.

Chemical Synapse

A specialized junction at which a neuron communicates with a target cell across a synaptic cleft using chemical messengers.

Presynaptic Terminal

The end of a nerve fiber where the release of chemicals (neurotransmitters) occurs, enabling the transfer of the signal to another neuron's receptor site.