Answer Happy

Consider the following premerger information about Firm A andFirm B: Firm A Firm B Total earnings $ 1,800 $ 900 Sharesoutstanding 1,100 300 Price per share $ 41 $ 45 Assume that Firm Aacquires Firm B via an exchange of stock at a price of $47 for eachshare of B's stock. Both Firm A and Firm B have no debtoutstanding. a. What will the earnings per share (EPS) of Firm A beafter the merger? (Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.) b. What will FirmA's price per share be after the merger if the market incorrectlyanalyzes this reported earnings growth (that is, the price-earningsratio does not change)? (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.) c. What willthe price-earnings ratio of the postmerger firm be if the marketcorrectly analyzes the transaction? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.) d-1. If there are no synergy gains, what will the shareprice of Firm A be after the merger? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.) d-2. What will the price-earnings ratio be? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) d-3. What does your answer for the shareprice tell you about the amount Firm A bid for Firm B? Was it toohigh? Too low?