Homework answers / question archive / Consider the following information for two all-equity firms, Firm A and Firm B: Firm A Firm B Total earnings $3,600 $1,320 Shares outstanding 720 480 Price per share $84 $18 Firm A is acquiring Firm B by exchanging 110 of its shares for all the shares in Firm B

Consider the following information for two all-equity firms, Firm A and Firm B: Firm A Firm B Total earnings $3,600 $1,320 Shares outstanding 720 480 Price per share $84 $18 Firm A is acquiring Firm B by exchanging 110 of its shares for all the shares in Firm B

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Consider the following information for two all-equity firms, Firm A and Firm B: Firm A Firm B Total earnings $3,600 $1,320 Shares outstanding 720 480 Price per share $84 $18 Firm A is acquiring Firm B by exchanging 110 of its shares for all the shares in Firm B. a) What is the cost of the merger if the merged firm is worth $75,600? b) What are the firm A’s EPS and PE ratio before and after the merger?