Problem:
Tangshan Mining is attempting to acquire Zhengsen Mining. Here is selected financial data: Item Tangshan Mining Zhengsen Mining Earnings available for common stock $12,000,000 $2,000,000 Number of shares of stock outstanding 1,500,000 60,000 Market price per share $100 $120 Tangshan Mining has sufficient authorized but unissued shares to do the proposed merger.
Required:
Question 1: Calculate the EPS of Tangshan Mining and Zhengsen Mining before the merger.
Question 2: If the ratio of exchange is 1.8, what will be the EPS of the merged company?
Note: Show supporting computations in good form.