Question

Target Bank has 30,000 shares of common stock. Alpha has 50,000 common equity shares. Combined earnings after the merger are expected to be $1,760,000. Right now Alpha reports earnings of $1,000,000 and Target reports $250,000. Determine the post-merger EPS.

Answer 1

the post merger EPS is $22

Step-by-step explanation:

The computation of the post merger EPS is shown below:

The post merger EPS is

= (Combined earnings after the merger) ÷ (total shares)

= $1,760,000 ÷ (30,000 + 50,000)

= $1,760,000 ÷ $80,000

= $22

Hence, the post merger EPS is $22