Rearden Metal has earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. Rearden Metal will pay for Associated Steel by issuing new shares. There are no expected synergies from the transaction.
Required:
1. If Rearden pays no premium to buy Associated Steel, then the number of shares Rearden needs to issue to fund this deal will be closest to .
O 10 million
O 4 million
O 14 million
O 3 million
Answers: 3
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Rearden Metal has earnings per share of $2. It has 10 million shares outstanding and is trading at $...
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