Explain what would woodson''s shareholders earn

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Reference no: EM13109522

Woodson and Sons Inc. of Chandler Arizona wishes to assess the proposed merger into the Oxley Group. Woodson had 2004 earnings of $200,000 and 100,000 shares of common stock outstanding, as well as expect earnings to grow at an annual rate of 7 percent. Oxley on the other hand had 2004 earnings of $800,000 with 200,000 shares of common stock outstanding as well as expects its earnings to grow at an annual rate of 3%.
a. Compute the earnings per share (EPS) for Woodson for the next 8 years without merger.
b. Explain what would Woodson's shareholders earn in each of the next 8 years on each of their shares swapped for Oxley's shares at the ratio of (1) 0.6 and (2) 0.08 shares of Oxley for one share of Woodson?
c. If you were the financial manager of Woodson as well as Sons which option would your recommend? B-1 or B-2? Why?

Reference no: EM13109522

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