Consider the Following Premerger Information About Firm a and Firm

question 29

Multiple Choice

Consider the following premerger information about Firm A and Firm B:
Assume that Firm A acquires Firm B via an exchange of stock at a price of $25 for each share of B's stock.Both A and B have no debt outstanding.What will the earnings per share of Firm A be after the merger?

• A) $1.60
• B) $1.86
• C) $1.95
• D) $2.02
• E) $2.10

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Definitions:

Cash Dividends

A distribution of profits by a corporation to its shareholders in the form of cash.

Operating Activities

Transactions and other events related to the day-to-day function of a business, typically involving revenue and expense activities directly affecting cash flow.

Investments In Securities

Financial assets such as stocks, bonds, or mutual funds purchased with the intent of generating income or appreciating in value.

Operating Activities

Activities that relate to a company's primary business operations, such as selling goods or services, which are reflected in its cash flow statement.