In 2021, we had 10M shares outstanding and our stock is trading at $50

We expect our stock to trade at $60, which is an 8 times PE multiple in 2022.

Alternatively, we can grow earnings by acquiring the target company for $150,000,000 using our stock at the end on 2021.  Does the merger make sense and maximizes shareholders wealth if the consolidated company continues to trade at a PE multiple of 8 i

		Yes - because EPS would grow to $10.50 and at a P/E of 8 the stock would be valued at $84.00
		No - because EPS would grow to $6.00 and at a P/E of 8 the stock would be valued at $48.00
		Yes - because EPS would grow to $8.08 and at a P/E of 8 the stock would be valued at $64.62
		Yes - because EPS would grow to $9.50 and at a P/E of 8 the stock would be valued at $76.00
		Not enough information is provided
		No - because EPS would grow to $6.92 and at a P/E of 8 the stock would be valued at $55.36

2021 (A)	2022 (F)		2022 (F)		Consolidated
	My Company			Target Company
Net Income	10,000,000	75,000,000		30,000,000		105,000,000
Shs Outstanding		10,000,000			a
EPS		7.50			b
PE		8
Price	50.00	60			c
Purchase Price	150,000,000

Answer rating: 100% (QA)

purchase price150000000 my companys share price 50 no of shares issued ... View the full answer