Consider two companies. Rearden Metal has earnings per share of €2, 10 million shares outstanding and its current stock price is €20. Associated Steel, has earnings per share of €1,25, 4 million shares outstanding, and a stock price of €15 Rearden Metal is thinking of buying Associated Steel and will pay for Associated Steel by issuing new shares. Rearden Metal expects no synergies from the acquisitior Assume that Rearden Metal offers an exchange ratio such that, at current pre-announcement share prices for both firms, the offer represents a 20% premium to buy Associated Steel. a) Compute the price per share of the Rearden Metal that should be observed immediately

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