DEF stockholders are paid the current market value of their ﬁrm in the form of ABC stock. Both ﬁrms are 100% equity-ﬁnanced. The total earnings of the combined ﬁrm are $77,000. What is the price/earnings ratio after the merger?
A) 8.15
B) 9.88
C) 10.41
D) 12.42
E) 13.37

Question

DEF stockholders are paid the current market value of their ﬁrm in the form of ABC stock. Both ﬁrms are 100% equity-ﬁnanced. The total earnings of the combined ﬁrm are $77,000.  What is the price/earnings ratio after the merger?
A) 8.15 
B) 9.88 
C) 10.41 
D) 12.42 
E) 13.37

Quizplus · Accepted Answer

The Answer of DEF stockholders are paid the current market value of their ﬁrm in the form of ABC stock. Both ﬁrms are 100% equity-ﬁnanced. The total earnings of the combined ﬁrm are $77,000.  What is the price/earnings ratio after the merger?
A) 8.15 
B) 9.88 
C) 10.41 
D) 12.42 
E) 13.37

DEF Stockholders Are Paid the Current Market Value of Their