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Item Marla's Cafe Victory Club Earnings available for common stock $20,000 $8,000 Number of shares of common stock outstanding 20,000 4,000 Market price per share $12 $24

Item Marla's Cafe Victory Club Earnings available for common stock $20,000 $8,000 Number of shares of common stock outstanding 20,000 4,000 Market price per share $12 $24

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Ratio of exchange and EPS  Marla’s Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table.

 

Marla’s Cafe has sufficient authorized but unissued shares to carry out the proposed merger.

  1. If the ratio of exchange is 1.8, what will be the earnings per share (EPS) based on the original shares of each firm?
  2. Repeat part a if the ratio of exchange is 2.0.
  3. Repeat part a if the ratio of exchange is 2.2.
  4. Discuss the principle illustrated by your answers to parts a through
Item Marla's Cafe Victory Club Earnings available for common stock $20,000 $8,000 Number of shares of common stock outstanding 20,000 4,000 Market price per share $12 $24
Transcribed Image Text:Item Marla's Cafe Victory Club Earnings available for common stock $20,000 $8,000 Number of shares of common stock outstanding 20,000 4,000 Market price per share $12 $24
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