(Answered) Earnings per share the following data concerning companies

Finance

Earnings per Share. The following data concerning companies A and B are presented:

	Company A	Company b
Net income	$35,000	$50,000
Shares outstanding	5,000	10,000
Earnings per share	$7.00	$5.00
P/E ratio	10	14
Market price	$70	$70

Company B is the acquiring company, exchanging its shares on a one-for-one basis for company A's shares. The exchange ratio is based on the market prices of company A and company B stock.

(a) What will earnings per share be subsequent to the merger?

(b) What is the change in earnings per share for the stockholders of companies A and B?

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