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Your company has earnings per share of $ 3.58 . It has 1.1 million shares? outstanding, each of which has a price of $ 43 . You are thinking of buying? TargetCo, which has earnings per share of $ 0.90 ?, 1.1 million shares? outstanding, and a price per share of $ 28 . You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction.

a. If you pay no premium to buy? TargetCo, what will your earnings per share be after the? merger?

b. Suppose you offer an exchange ratio such? that, at current? pre-announcement share prices for both? firms, the offer represents a 15 % premium to buy TargetCo. What will your earnings per share be after the? merger?

c. What explains the change in earnings per share in part ?(a?)? Are your shareholders any better or worse? off?

d. What will your? price-earnings ratio be after the merger? (if you pay no? premium)? How does this compare to your? P/E ratio before the? merger? How does this compare to? TargetCo's premerger? P/E ratio? a. If you pay no premium to buy? TargetCo, what will your earnings per share be after the? merger? The EPS after the merger is ?$nothing . ? (Round to the nearest? cent.) b. Suppose you offer an exchange ratio such? that, at current? pre-announcement share prices for both? firms, the offer represents a 15 % premium to buy TargetCo. What will your earnings per share be after the? merger? The EPS after the merger is ?$nothing . ? (Round to the nearest? cent.) c. What explains the change in earnings per share in part ?(a?)? ?(Select the best choice? below.) A. EPS always decline if the firm issues new shares to pay for a merger. B. EPS declines because you are over minus paying for TargetCo. C. EPS declines because TargetCo has a higher price dash earnings ratio than your firm. Are your shareholders any better or worse? off????(Select the best choice? below.) A. In this? case, your shareholders are neither worse nor better off. B. In this? case, your shareholders are worse off. C. In this? case, your shareholders are better off. d. What will your? price-earnings ratio be after the merger? (if you pay no? premium)? How does this compare to your? P/E ratio before the? merger? How does this compare to? TargetCo's premerger? P/E ratio? The? P/E ratio after the merger is nothing . ? (Round to two decimal? places.) How does this compare to? TargetCo's premerger? P/E ratio? The? P/E ratio before the merger was nothing . ? (Round to two decimal? places.) ?TargetCo's premerger? P/E ratio was nothing . ? (Round to two decimal? places.)

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