$$\begin{array} { l r r }
&\underline{ \text { Company A }} &\underline{ \text { Company B }} \
\text { Total earnings } & \$ 2,000,000 & \$ 1,000,000 \
\text { Number of shares outstanding } & 400,000 & 100,000 \
\text { Earnings per share } & \$ 5.00 & \$ 10.00 \
\text { Price/earnings } & 6 \mathrm { X } & 3 \mathrm { X } \
\text { Market price/share } & 30.00 & \$ 30.00
\end{array}$$
-Assume Company A pays a 20% premium for Company B in a pooling of interests' transaction.Calculate the post-merger EPS for Company
A) $10.00
B) $5.00
C) $7.50
D) $6.00

Question

$$\begin{array} { l r r } 
&\underline{ \text { Company A }} &\underline{ \text { Company B }} \
\text { Total earnings } & \$ 2,000,000 & \$ 1,000,000 \
\text { Number of shares outstanding }  & 400,000 & 100,000 \
\text { Earnings per share } & \$ 5.00 & \$ 10.00 \
\text { Price/earnings } & 6 \mathrm { X } & 3 \mathrm { X } \
\text { Market price/share } & 30.00 & \$ 30.00
\end{array}$$
-Assume Company A pays a 20% premium for Company B in a pooling of interests' transaction.Calculate the post-merger EPS for Company
A) $10.00
B) $5.00
C) $7.50
D) $6.00

Quizplus · Accepted Answer

The Answer of $$\begin{array} { l r r } 
&\underline{ \text { Company A }} &\underline{ \text { Company B }} \
\text { Total earnings } & \$ 2,000,000 & \$ 1,000,000 \
\text { Number of shares outstanding }  & 400,000 & 100,000 \
\text { Earnings per share } & \$ 5.00 & \$ 10.00 \
\text { Price/earnings } & 6 \mathrm { X } & 3 \mathrm { X } \
\text { Market price/share } & 30.00 & \$ 30.00
\end{array}$$
-Assume Company A pays a 20% premium for Company B in a pooling of interests' transaction.Calculate the post-merger EPS for Company
A) $10.00
B) $5.00
C) $7.50
D) $6.00

-Assume Company a Pays a 20% Premium for Company B