Alpha is planning on merging with Beta.Alpha will pay Beta's shareholders the current value of their stock in shares of Alpha.Alpha currently has 4,200 shares of stock outstanding at a market price of $40 a share.Beta has 2,500 shares outstanding at a price of $18 a share.The after-merger earnings will be $8,800.What will the earnings per share be after the merger?
A)$1.61
B)$1.65
C)$1.75
D)$1.81
E)$1.86

Question

Quizplus · Accepted Answer

Number of shares = 4,200 + [(2,500 × $18)/$40] = 5,325Earnings per share = $8,800/5,325 = $1.65

Alpha Is Planning on Merging with Beta