Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Graham​ & Sons wishes to evaluate a proposed merger into the RCN Group. Graham had 2019 earnings of $250,000​, has 100,000 shares of common stock​ outstanding, and expects earnings to grow at an annual rate of 9​%. RCN had 2019 earnings of ​$900,000​, has 200,000 shares of common stock​ outstanding, and expects its earnings to grow at 3​% per year.
 
a. Calculate the expected earnings per share​ (EPS) for Graham​ & Sons for each of the next 5 years ​(2020​-2024​) without the merger.
part A answers are completed
year 2020: $2.725
year 2021: $2.97425
year 2022: $3.24239
year 2023: $3.53487
year 2024: $3.85425
 
b. What would​ Graham's stockholders earn in each of the next 5 years ​(2020​-2024​) on each of their Graham shares swapped for RCN shares at a ratio of 0.8 share of RCN for 1 share of​ Graham?
 
Part B is where I need help.
year 2020 EPS: $3.43
year 2021 EPS: $ ?
year 2022 EPS: $ ?
year 2023 EPS: $ ?
year 2023 ESP: $ ?
 
please help me find calculation for year 2021 to year 2024 in part B
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b. The expected​ post-merger EPS in year 2020 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is
​$3.43 (Round to the nearest​ cent.)
 
The expected​ post-merger EPS in year 2021 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is ​$3.58 ​(Round to the nearest​ cent.)
 
The expected​ post-merger EPS in year 2022 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is ​$3.73 ​(Round to the nearest​ cent.)
 
The expected​ post-merger EPS in year 2023 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is ​$3.90 ​(Round to the nearest​ cent.)
 
The expected​ post-merger EPS in year 2024 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is ​$4.07.​(Round to the nearest​ cent.)
 
(Please double check. These are the answers (in bold print) that I got.)
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b. The expected​ post-merger EPS in year 2020 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is
​$3.43 (Round to the nearest​ cent.)
 
The expected​ post-merger EPS in year 2021 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is ​$3.58 ​(Round to the nearest​ cent.)
 
The expected​ post-merger EPS in year 2022 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is ​$3.73 ​(Round to the nearest​ cent.)
 
The expected​ post-merger EPS in year 2023 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is ​$3.90 ​(Round to the nearest​ cent.)
 
The expected​ post-merger EPS in year 2024 for​ Graham's stockholders on each of their original shares of stock which was swapped for RCN stock is ​$4.07.​(Round to the nearest​ cent.)
 
(Please double check. These are the answers (in bold print) that I got.)
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