Question

Assume the following financial data for Rembrandt Paint Co. and Picasso Art Supplies:


a. If all the shares of Rembrandt Paint Co. are exchanged for those of Picasso Art Supplies on a share-for-share basis, what will postmerger earnings per share be for Picasso Art Supplies? Use an approach similar to that in Table 20-3.
b. Explain why the earnings per share of Picasso Art Supplies changed.
c. Can we necessarily assume that Picasso Art Supplies is better off after themerger?


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  • CreatedOctober 14, 2014
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