Connect Firm A Firm B
Total Earnings $ 1,700.00 $ 1,200.00
Shares Outstanding 900 250
Price per Share $ 35.00 $ 39.00
A exchange for B $ 41.00
NO DEBT
EPS
Cost $ 10,250.00
Shares offered 292.86
A EPS $ 2.43
B Original P/E $ 18.53
Price $ 45.05
C New P/E 14.40
D1 New Shar Price $ 34.58
D2 P/E 14.22
D3 NPV Negative too high (0.17)