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@Fertfood has a current market value of \$30 million and earns \$2,700,000 annually, while Tools-4U has a market value of \$5 million and annual...

@Fertfood has a current market value of \$30 million and earns \$2,700,000 annually, while Tools-4U has a market value of \$5 million and annual earnings of \$1 million per year. If the companies merge an additional cash flow of \$136513 would result next year. The merged firm will have 5 million shares. The merged firm's earnings in the first year will comprise the pre-merged earnings of each firm plus the additional cashflow mentioned above.

﻿If the post-merged firm's P/E ratio is expected to be 17 what is the expected market price per share using the P/E method?

Fertfood 2700 Tool 1000 Additional 137 Total 3837... View the full answer

• I got the total is 3837, and EPS= 3837/5000=0.77, BUT why the Price is 65,221 ?
• duouuuuuu
• Jun 09, 2018 at 3:11am
• 65221 = 3837 x 17 . You are calculating the value of the combined company
• KevinHeer
• Jun 09, 2018 at 9:15am

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