Rearden Metal has earnings per share of $2. It has 10 million shares outstanding and is...

Rearden Metal has earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. Rearden Metal will pay for Associated Steel by issuing new shares. There are no expected synergies from the transaction. If Rearden offers an exchange ratio such that, at current pre-announcement share prices for both firms, the offer represents a 20% premium to buy Associated Steel, then the price per share of the Rearden immediately after the announcement will be closest to:

Group of answer choices $15.00 $17.20 $18.60 $19.10

Expert Solution

So, the closest option is $18.60

Answer: $18.60

jeff jeffy answered 4 months ago

Rearden Metal has earnings per share of $2. It has $10 million shares outstanding and is...

Rearden Metal has earnings per share of $2. It has $10 million shares outstanding and is trading at $20 per share. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. Rearden metal will pay for Associated Steel by issuing new shares. There are no expected synergies from the transaction. If Rearden pays no premium to buy Associated Steel, then what is Rearden's earnings...

GrandeCo has earnings per share of £2. It has 11 million shares outstanding and is trading...

GrandeCo has earnings per share of £2. It has 11 million shares outstanding and is trading at £17 per share. GrandeCo is thinking of buying ChicoCo, which has earnings per share of £1.25, 7.3 million shares outstanding, and a price per share of £12.75. GrandeCo will pay for ChicoCo by issuing new shares. There are no expected synergies from the transaction. If GrandeCo offers an exchange ratio such that, at current pre-announcement share prices for both firms, the offer represents...

Your company has earnings per share of $ 3.58 . It has 1.1 million shares? outstanding,...

Your company has earnings per share of $ 3.58 . It has 1.1 million shares? outstanding, each of which has a price of $ 43 . You are thinking of buying? TargetCo, which has earnings per share of $ 0.90 ?, 1.1 million shares? outstanding, and a price per share of $ 28 . You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. a. If you pay no premium to buy? TargetCo,...

Your company has earnings per share of $5. It has 1 million shares outstanding, each of...

Your company has earnings per share of $5. It has 1 million shares outstanding, each of which has a price of $36. You are thinking of buying TargetCo, which has earnings per share of $1, 1 million shares outstanding, and a price per share of $23. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offer an exchange ratio such that, at current pre-announcement share prices for both firms, the...

Kyle's company has earnings per share of $8. It has 1 million shares? outstanding, each of...

Kyle's company has earnings per share of $8. It has 1 million shares? outstanding, each of which has a price of $24. Kyle is thinking of buying? TargetCo, which has earnings per share of $4?, 1 million shares? outstanding, and a price per share of $21. Kyle will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Complete parts? (a) through? (d) below. a. If Kyle pays no premium to buy? TargetCo, what will...

Your company has earnings per share of $6. It has 1 million shares outstanding, each of...

Your company has earnings per share of $6. It has 1 million shares outstanding, each of which has a price of $60. You are thinking of buying TargetCo, which has earnings per share of $3, & 1 million shares outstanding, and a price per share of $52.50. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Complete parts a through d below. If you pay no premium to buy TargetCo, what will...

Your company has earnings per share of $3. It has 1 million shares outstanding, each of...

Your company has earnings per share of $3. It has 1 million shares outstanding, each of which has a price of $45. You are thinking of buying TargetCo, which has earnings of $3 per share, 1 million shares outstanding, and a price per share of $24. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offered an exchange ratio such that, at current pre-announcement share prices for both firms, the...

Your company has earnings per share of $ 5 It has 1 million shares? outstanding, each...

Your company has earnings per share of $ 5 It has 1 million shares? outstanding, each of which has a price of $ 36. You are thinking of buying? TargetCo, which has earnings of $ 3 per? share, 1 million shares? outstanding, and a price per share of $30 You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offered an exchange ratio such? that, at current? pre-announcement share prices for...

Your company has earnings per share of $ 3.84. It has 1.1 million shares outstanding, each...

Your company has earnings per share of $ 3.84. It has 1.1 million shares outstanding, each of which has a price of $ 38. You are thinking of buying TargetCo, which has earnings per share of $ 0.96, 1.4 million shares outstanding, and a price per share of $ 25. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. a. If you pay no premium to buy TargetCo, what will your earnings...

Your company has earnings per share of $4. It has 1 million shares outstanding, each of...

Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $43. You are thinking of buying TargetCo, which has earnings per share of $3, 1 million shares outstanding, and a price per share of $21. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offer an exchange ratio such that, at current pre-announcement share prices for both firms, the...

Question