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:

Articles of Incorporation

A document filed with a state by the founders of a corporation detailing the major components of a company, such as its objectives, structure, and planned operations.

Authorized Stock

The maximum amount of stock that a corporation is legally permitted to issue, as authorized by its corporate charter.

State Charter

is an official authorization for the creation and operation of a corporation, bank, or other organization within a specific state.

Shares Outstanding

The total number of a company's shares that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s insiders.