EPS and postmerger price Data for Henry Company and Mayer Services are given in the following table. Henry Company is considering merging with Mayer by swap-ping 1.25 shares of its stock for each share of Mayer stock. Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging. Item Henry company Mayer Services Earnings available for common stock $225,000 $50,000 Number of shares of common stock outstanding $90,000 $15,000 Market price per share $45 $50 C. Calculate the price/earnings (P/E) ratio used to purchase Mayer Services.
EPS and postmerger price Data for Henry Company and Mayer Services are given in the following table.
Henry Company is considering merging with Mayer by swap-ping 1.25 shares of its stock for each share of Mayer stock.
Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging.
Item Henry company Mayer Services
Earnings available for common stock $225,000 $50,000
Number of shares of common stock outstanding $90,000 $15,000
Market price per share $45 $50
C. Calculate the price/earnings (P/E) ratio used to purchase Mayer Services.
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