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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Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $60. You are
thinking of buying TargetCo, which has earnings per share of $2, 1 million shares outstanding, and a price per share of
$45. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Complete
parts a through d below.
a. If you pay no premium to buy TargetCo, what will your earnings per share be after the merger?
Your new earnings per share will be $ ☐ .
(Round to the nearest cent.)
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Transcribed Image Text:Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $60. You are thinking of buying TargetCo, which has earnings per share of $2, 1 million shares outstanding, and a price per share of $45. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Complete parts a through d below. a. If you pay no premium to buy TargetCo, what will your earnings per share be after the merger? Your new earnings per share will be $ ☐ . (Round to the nearest cent.)
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