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

Question

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

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? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Rembrandt
Paint Co. Picasso Art
Supplies   Total earnings $ 648,000 $ 1,160,000   Number of shares of stock outstanding 180,000 580,000   Earnings per share $ 3.60 $ 2.00   Price-earnings ratio (P/E) 15X 27X   Market price per share $ 54 $ 54

Explanation / Answer

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

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? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Rembrandt
Paint Co. Picasso Art
Supplies   Total earnings $ 648,000 $ 1,160,000   Number of shares of stock outstanding 180,000 580,000   Earnings per share $ 3.60 $ 2.00   Price-earnings ratio (P/E) 15X 27X   Market price per share $ 54 $ 54

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