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If all the shares of rembrandt paint co are exchanged for


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

795_Postmerger.png

a. 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?

b. Explain why the earnings per share of Picasso Art Supplies changed.

c. Can we necessarily assume that Picasso Art Supplies is better off after the merger?

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Finance Basics: If all the shares of rembrandt paint co are exchanged for
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